A new tax year is upon us, which brings the usual changes to legislation and tax and National Insurance thresholds. It’s useful to take time to complete a payroll check before calculating your first payroll of the new tax year, making sure it will run accurately from the start.
Here are some points for you to consider:
- Has your payroll software been updated to reflect the new tax and National Insurance thresholds for the 2017/18 tax year? Both the tax thresholds for Scotland and the rest of the United Kingdom, and the National Insurance thresholds for the 2017/18 tax year, have been increased.
- Have you applied all P9 tax code notifications received for your employees or, where no P9 has been received, uplifted tax codes as follows?
- Tax codes with an L suffix by 50
- Tax codes with an M suffix by 55
- Tax codes with an N suffix by 45
- Have you completed an employee benefit assessment for employees in a salary sacrifice arrangement for Childcare Vouchers? The level of salary an employee can sacrifice is dependent on which tax band their annual earnings plus any taxable benefits falls in to.
- Have you assessed your estimated pay bill for the coming year to determine whether you will be liable to pay the apprenticeship levy? From the 2017/18 tax year, the apprenticeship levy will take effect. If you expect your pay bill to be higher than £3million in the tax year, you will be required to pay towards the levy.
- Are you a small employer? If your business’s National Insurance liability for the 16/17 tax year was lower than £45,000, you qualify as a small employer for 2017/18. If you’re a small employer, you can reclaim 100% of any statutory maternity pay (SMP), statutory paternity pay (SPP), statutory adoption pay (SAP), and shared parental pay (ShPP) paid to employees, plus an extra 3% compensation. If you’re not a small employer, you can reclaim 92% of statutory pay.
- Have you manually calculated a selection of your employees’ salaries and compared them to the salaries calculated by your payroll software? This allows you to ensure tax and National Insurance contributions are being calculated correctly in the new year by your payroll software.
- Can you claim the £3,000 Employment Allowance this year? As the legislation surrounding Employment Allowance hasn’t changed this year, if you were eligible to claim last year and your circumstances have not changed, you will still be eligible.
Doing this payroll check at the beginning of the new tax year ensures that your payroll is accurate from the first pay run and reduces the risk of having to adjust your payroll at a later date.
If you have a payroll-related question, please contact us in the Payroll team on 0131 558 5800 or at firstname.lastname@example.org.