New tax year payroll checklist for employers

The start of a new tax year is a good opportunity for employers to review their payroll processes and make sure everything is set up correctly for the year ahead. A quick check can help avoid payroll errors, employee queries and HMRC issues later in the year.

  1. Check employee tax codes

For the 2026/27 tax year, the standard Personal Allowance remains £12,570 per year, which is £242 per week or £1,048 per month.

HMRC has confirmed that a new tax code will not be sent for every employee. Where no new tax code has been received, employers should carry forward the tax code from 2025/26 but should not carry forward ‘w1’ or ‘m1’.

2. Review National Insurance settings

National Insurance is one of the areas most likely to cause payroll errors if thresholds or employee categories are incorrect. Employers should check whether any employees fall into special categories, such as under-21s, apprentices under 25 or employees over State Pension age.

3. Check National Minimum Wage rates

National Minimum Wage rates changed from April 2026:

Employers should check all pay rates, especially where employees have had birthdays that move them into a new rate band.  It is also important to consider working hours and deductions as these can affect minimum wage compliance.

4. Review statutory family pay

For Statutory Maternity Pay, the first six weeks are payable at 90% of average weekly earnings. The remaining weeks are paid at £194.32 or 90% of average weekly earnings, whichever is lower. This is the same rate for for Paternity Pay, Adoption Pay and Shared Parental Pay.

5. Understand the new Statutory Sick Pay rules

From 6 April 2026, changes introduced by the Employment Rights Act 2025 mean:

HMRC has confirmed that the new rules apply to sickness absences starting on or after 6 April 2026.

6. Check student loan and postgraduate loan deductions

Student loan deductions can easily be missed, particularly when employees start a new job or changes loan plan.

For 2026/27, the annual thresholds are:

Student loan deductions are made at 9%, while postgraduate loan deductions are made at 6%.

7. Check Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability. For 2026/27, the Employment Allowance is £10,500. Employers should check eligibility and ensure payroll software is applying the correct treatment.

8. Prepare for Employment Rights Act changes

The Employment Rights Act 2025 introduces changes to employment law during 2026 and 2027 and employers should start preparing now.

Changes already relevant from April 2026 include the new SSP rules, day-one Paternity Leave, Bereaved Partner’s Paternity Leave, changes affecting Shared Parental Leave.

Employers should also prepare for changes expected from 1 January 2027, including a reduction in the qualifying period for ordinary unfair dismissal protection from two years to six months.

Practical steps for employers to do now include reviewing sickness absence policies, updating family leave and bereavement leave policies, checking employee handbooks, reviewing probationary periods and training managers on absence, leave and dismissal processes.

9. Keep accurate payroll and HR records

Good records help employers deal with payroll queries, support compliance and respond to HMRC if information is requested. With payroll and employment law changes taking effect, accurate record-keeping is especially important.

At Dominic Hill Associates, we can help ensure your payroll is set up correctly and your business remains compliant with HMRC requirements. If you would like support with payroll, PAYE please contact us on info@dominichill.co.uk