A new tax year always tends to bring around changes required to keep your payroll up to date with new tax legislation, along with other employment rights for your teams.
Here are some key areas to think about in your business.
Directors Basic Salary
If you are a Director of your own Limited Company and structure your personal income so that it is paid via small salary and topped up with dividends, we'd advise that you increase your salary to £735 per month from April 2021.
This level of salary will ensure that your salary remains free of National Insurance (both employee & employers).
If we already process your payroll, we'll update this for you at our end.
National Minimum Wage (NMW) and National Living Wage (NLW)
These rates are all legally requirements and are due to increase from April 2021. It's crucial that you ensure that you are paying these hourly rates as an absolute minimum to all of your employees.
The new National Minimum Wage rates are:
|Age Range||Hourly Rate|
|23 and over (National Living Wage)||£8.91|
|21 to 22||£8.36|
|18 to 20||£6.56|
New Payroll Year Checks
If you are running your own payroll, it is always worth completing a few checks when starting a new tax year. These can include:
- Reviewing tax code notices for your team for the new tax year.
- Checking the NMW/NLW rates as above.
- Ensure that you are claiming the £4,000 Employment Allowance, if you qualify.
- Review your workplace pensions to ensure that this is fully up to date and using the correct rates.
Closing Out Last Year
There are also some particular points to make sure that you have completed in relation to the 2020/21 tax year. Make sure that you:
- Make your final RTI submission by 19th April. After that date you cannot file for 2020/21 to HMRC.
- Issue P60's to all staff before 31st May (Here's the guide to doing this in Xero (Share P60's)
- File a final EPS as required. In particular, if you have suffered any CIS deductions and wish for them to be credited to your PAYE account.
We hope this provides some useful information for completing your 2021 payroll and moving into 2022, but if you have any questions just drop us a message.