Reviewing your payroll and ensuring it reflects the latest tax, holiday, and minimum wage changes that the new tax year brought is essential to make sure your employees are being paid correctly.
However, keeping track of these amid the busy new financial year isn’t easy. We’ve put together a handy overview of the most recent changes to get you off on the right track:
National Insurance Contributions (NICs) changes
Whilst the Personal Allowance remains unchanged, remaining at £12,570, and the tax rate bands remain the same, NICs have been in the spotlight.
As announced in the Spring Budget, Class 1 employee NICs have decreased to eight per cent, which must be reflected if you employ staff on a Pay-As-You-Earn (PAYE) basis.
Employer NICs remain at 13.8 per cent.
National Minimum Wage increases
The National Minimum Wage (NMW) and National Living Wage (NLW) have increased significantly, with the NLW being extended to include 21 and 22-year-olds.
As of 6 April 2024, NMW and NLW rates are set at:
- Over 21 years old – £11.44
- 18-20 years old – £8.60
- Under 18 years old and apprentices – £6.40
With the considerable rise, this may present cash flow challenges so we would also advise taking the opportunity to review other costs and adapt your financial plan if necessary.
Changes to holiday pay
For holiday years starting on or after 1 April 2024, if you employ part-year or irregular-hours workers you must calculate holiday entitlement and pay at a rate of 12.07 per cent of hours worked in a pay period.
This can be paid through one of two methods:
- Accrual – Employees can receive holiday pay at the time they take their leave, which is the more traditional method.
- Rolling up – Employees can receive holiday pay for the year split equally across all pay periods, effectively including holiday pay in regular payroll payments.
If an employee has had statutory, parental or sick leave in the current month, then the average pay should be calculated using gross pay taken over the previous 52 weeks.
Statutory payment increases
Statutory payments, covering parental pay and sick pay, increased slightly from 6 April 2024.
The new Statutory Sick Pay (SSP) rate for this financial year is £116.75 per week.
A new parental pay rate of £184.03 has also been introduced and applies to:
- Statutory Maternity Pay (SMP)
- Statutory Adoption Pay (SAP)
- Statutory Paternity Pay (SPP)
- Statutory Shared Parental Pay (ShPP)
- Statutory Parental Bereavement Pay (SPBP)
You must ensure you review your payroll in detail to ensure you are paying your employees correctly and all tax obligations are fulfilled.
If you need advice on updating your payroll, contact our team today.