The new payroll year starts on the 6th of April 2021. The most common question I'm being asked right now is: "What do I need to do to prepare my payroll for the first pay run of the tax year?" Well, there are a number of things you need to remember ...
With the new payroll year starting on the 6th of April 2021, will you be prepared?
First, and probably most important, make sure that you have closed the previous year successfully and processed your last pay run in March. You should be able to print P60's in Xero and review your pay for the year by looking at the P11 reports. These summarise the years pay and you don't need to send a P60 to anyone who left in the previous tax year who has had a P45 leavers form.
"Now, it's time to prepare for the new tax year!"
Go to the HMRC page in your Payroll Settings and, if eligible, check the boxes for 'Small Employers Relief' and 'Employment Allowance'. To check if you are eligible this year, double-check the latest thresholds on the HMRC website. For Small Employers Relief click here as this is based on your national insurance bill in the previous year. For Employment Allowance click here.
Next up, review your employees' National Insurance categories. If an employee has 'come of age' or reached retirement age and kept working, their code may have changed. You can see a list of the current codes here.
These are the key dates to remember for your payroll obligations:
5th April - The end of the tax year
19th April - End of the tax year filing deadline
31st May - Deadline to provide employees with P60's
6th July - Deadline to report Benefits (P11D(b))
Time to update your employees' tax codes. If you have anyone with the 'Week 1 Month 1' box ticked in the last pay run in the previous year, you should untick the box before the pay run in the new year.
Anyone with an L, M, or N code will have their tax code go up by 7 this year. Watch out for any tax code change notifications you may have been sent. I received a couple in February dated the 6th of April so need to enter those changes before processing the first pay run for this year.
Next, review any student loans. Scottish employees may have a new Plan 4 student loan to pay back so double-check for those changes too. Also remember that the National Living Wage/National Minimum Wage has not only changed, but the age thresholds have changed too, -.
"And finally, review your employees' pension contributions!"
The auto-enrolment pension percentages are staying the same, but it is worth just checking that everyone is on at least the minimum of 5% employers and 3% employees if they have not opted out.
I know many companies who started auto-enrolment when it first came out for small companies in 2016 will also have their 3-year re-enrolment anniversary soon, so be aware when your re-enrollment date is for your company.
Until next time ...
ALISON MEAD
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
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