With the start of a new tax year underway, now is the ideal time to review your payroll processes and ensure everything is set up correctly for the year ahead. A thorough payroll check can help you avoid costly errors, ensure compliance with HMRC requirements, and give you peace of mind that your systems are working as they should.
To help you prepare, our payroll team has put together a practical checklist highlighting key areas that are often overlooked but can have a significant impact on your payroll accuracy and compliance.
Director checks
It is important to begin by reviewing how directors are recorded. All directors should be correctly flagged to ensure National Insurance contributions (NIC) are calculated using the appropriate method. Directors are subject to specific NIC rules and using the wrong calculation method could result in underpayments or overpayments.
You should also cross-check your payroll records against Companies House to confirm that all current directors are included and correctly identified. This review can help ensure there are no omissions or inconsistencies, particularly where board changes have occurred during the year.
Apprentices
If you employ apprentices, the start of the new tax year is a good time to confirm their current status. Apprenticeships can change over time, and individuals may no longer qualify as apprentices once they complete their training or move into a different role.
Pay rates should also be reviewed carefully. Apprentice minimum wage rules can change depending on age and length of employment, particularly once an apprentice has been employed for more than one year. Ensuring the correct rates are applied helps protect your business from non-compliance with National Minimum Wage requirements.
Employment Allowance
Employment Allowance can provide a valuable reduction in employer National Insurance costs, but eligibility should be reviewed each year. You should confirm whether your company continues to meet the qualifying criteria, especially if your business structure or staffing levels have changed.
Small Employers’ Relief
Businesses that qualify for Small Employers’ Relief can reclaim a higher percentage of statutory payments, such as Statutory Maternity Pay. To qualify, your Class 1 National Insurance liability must have been below £45,000 in the previous tax year.
Correct setup ensures statutory payments are recovered accurately and in line with HMRC rules.
Apprenticeship Levy
If your business is part of a group or is linked to other companies, it is crucial to review how the Apprenticeship Levy allowance is allocated. The levy allowance may need to be split between companies, and inaccuracies can lead to incorrect levy calculations.
Payroll settings should be updated to reflect the correct allocation for the new tax year, ensuring the right amounts are reported and paid through PAYE.
Standard hours and National Minimum Wage
Standard working hours should be reviewed for all employees to ensure they are accurately recorded. These hours play an important role in compliance checks, particularly when assessing National Minimum Wage entitlement.
You should also review pay rates to ensure all employees are being paid at least the minimum wage for their age group. When applying any pay increases, it is important to consider the correct pay reference period to ensure compliance throughout the year.
Payrolling benefits in kind
If you are payrolling benefits in kind for the new tax year, it is essential to ensure you have accurate and up-to-date values for each benefit. These amounts must be added correctly to payroll to ensure tax is deducted in real time, rather than through employees’ tax codes.
Taking the time to confirm benefit values early can help reduce errors and avoid adjustments later in the tax year.
PM+M payroll audit
Our payroll audit service could give you the confidence that your processes, calculations and submissions are accurate and compliant, reducing the risk of penalties and errors.
Our team of payroll specialists carry out a detailed review of your payroll records, checking that legislation is met, rates and limits applied correctly and highlighting any areas for improvement. You’ll also receive a clear, comprehensive report that not only identifies potential risks but also provides practical recommendations to strengthen your payroll processes.
Get in touch
Payroll rules and thresholds continue to evolve, and even small changes in your business can affect compliance. If you would like support reviewing your payroll setup or advice on any of the areas outlined above, our payroll team is here to help.
Please get in touch using the button below for tailored guidance and peace of mind as you head into the new tax year.
