Payroll guide for employers, tax year 2026/27
How payroll works, what the law requires of you as an employer, and how we work together each month. Written in plain English, with worked examples.
All figures apply to the 2026/27 tax year (6 April 2026 to 5 April 2027) unless stated otherwise.
01
Your payroll calendar at a glance.
| When | What happens |
|---|---|
| Every month, by the cut-off day | You send us hours, pay changes, starters and leavers |
| On or before each pay day | We send the Full Payment Submission (FPS) to HMRC |
| By the 19th of the next month | We send an Employer Payment Summary (EPS), if needed |
| By the 22nd of the next month | You pay HMRC the PAYE and National Insurance due (electronic payment) |
| By 31 May | Employees receive their P60 |
| By 6 July | P11D and P11D(b) filed for benefits not payrolled |
| By 22 July | Class 1A National Insurance paid (electronic payment) |
The tax month runs from the 6th of one month to the 5th of the next. The cut-off day need not be the end of the month; it could be any day we agree, for example the 5th of the following month.
02
Your duties as an employer.
Onboarding new staff correctly, paying at least the minimum wage and running payroll every month.
What the law requires of you.
- Check every person’s right to work in the UK
- Pay at least the National Minimum Wage
- Deduct the correct tax, NI and student loans
- Pay employer National Insurance
- Enrol eligible staff into a workplace pension
- Pay statutory sick and family pay
- Report benefits in kind
- Keep payroll records
Onboarding a new employee.
Before a new employee’s first pay day, please send us:
- Full legal name, address and date of birth
- National Insurance number, if known
- Start date, job title, pay rate and contracted hours
- Bank details for salary payments
- Their P45, or a completed starter checklist
- Student or postgraduate loan details
- Whether they are a director or an apprentice
- Whether they are a veteran in their first year of civilian work
Every employee must also receive a written statement of their main terms of employment on or before their first day.
Right to work checks.
You must check that a person is legally allowed to work in the UK before they start work.
Check.
Check original documents, or use the Home Office online service where the person has an online immigration status.
Record.
Keep a dated copy of the evidence.
Repeat.
Repeat the check before any time-limited permission to work expires.
New starter information.
With a P45.
We use the tax code and the pay and tax to date shown on it.
Without a P45.
The employee completes HMRC’s starter checklist and chooses one statement:
- A: this is my first job since 6 April, and I have had no taxable benefits or pension.
- B: this is now my only job.
- C: I have another job or a pension.
The answer decides which tax code we use until HMRC sends an updated one.
Paying at least the minimum wage.
The National Minimum Wage is the legal minimum hourly rate. It depends on the worker’s age and whether they are an apprentice.
£12.71
£13.21
| Category of worker | From 1 April 2026 | From 1 April 2027 |
|---|---|---|
| Aged 21 and over (National Living Wage) | £12.71 | £13.21 |
| Aged 18 to 20 | £10.85 | £11.27 |
| Aged under 18 | £8.00 | £8.31 |
| Apprentices (under 19, or in their first year) | £8.00 | £8.31 |
The April 2027 rates were announced on 28 October 2026.
Worked example: minimum wage check.
Sam is 25 and is paid £2,000 a month. In April 2026 Sam worked 160 hours.
| Step | Calculation | Result |
|---|---|---|
| Pay per hour | £2,000 ÷ 160 | £12.50 |
| Minimum required (aged 21 and over) | National Living Wage | £12.71 |
| Shortfall | (£12.71 − £12.50) × 160 | £33.60 |
| Minimum pay for April | £2,000 + £33.60 | £2,033.60 |
Processing payroll every month.
- You send us payroll information by the agreed cut-off day.
- We calculate gross pay, deductions and employer costs.
- We send you a payroll summary to approve by the agreed date.
- We issue payslips to your employees.
- We report the payroll to HMRC on or before pay day.
- We tell you what to pay HMRC and your pension provider, and by when.
03
Deductions from pay.
Income tax, National Insurance and student loans: what comes out of each payslip, and why.
What comes out of an employee’s pay.
| Deduction | Paid to |
|---|---|
| Income tax (PAYE) | HMRC |
| Employee National Insurance | HMRC |
| Student and postgraduate loan repayments | HMRC, for the Student Loans Company |
| Employee pension contributions | Your pension provider |
| Other agreed deductions, such as a season ticket loan | As agreed |
PAYE income tax: how it works.
PAYE (Pay As You Earn) collects income tax from wages each pay day, so most employees do not need to file a tax return.
Tax code.
HMRC issues each employee a tax code and sends it to us.
Tax-free pay.
The tax code tells payroll how much of the employee’s pay is tax free.
Cumulative.
Each month looks at total pay and tax since 6 April, which corrects small differences automatically.
Tax codes explained.
| Code | What it means |
|---|---|
| 1257L | The standard code for 2026/27: £12,570 a year tax free, about £1,048 a month |
| BR | All pay taxed at 20%, often used for a second job |
| 0T | No tax-free allowance |
| K codes | An amount is added to taxable pay, usually for benefits or unpaid tax |
| S or C prefix | Scottish (S) or Welsh (C) taxpayer |
Emergency codes.
1257L W1, 1257L M1 or 1257L X are used when HMRC does not yet have full information. They are not cumulative, so the employee may pay too much or too little until HMRC updates the code.
If a code looks wrong.
We can only use the code HMRC gives us. The employee should contact HMRC directly.
Income tax bands for 2026/27.
| Band | Annual taxable income | Rate |
|---|---|---|
| Personal Allowance | First £12,570 of income | 0% |
| Basic rate | Up to £37,700 above the allowance | 20% |
| Higher rate | £37,701 to £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
England, Wales and Northern Ireland. Monthly guide on code 1257L: about the first £1,048 is tax free, the next £3,141.67 is taxed at 20%, and pay above that at 40%.
Tapering.
The Personal Allowance falls by £1 for every £2 of income above £100,000.
2027/28.
The Government has confirmed these bands are unchanged for 2027/28.
Income tax for Scottish taxpayers.
| Band | Taxable income above £12,570 | Rate |
|---|---|---|
| Starter | Up to £3,967 | 19% |
| Basic | £3,968 to £16,956 | 20% |
| Intermediate | £16,957 to £31,092 | 21% |
| Higher | £31,093 to £62,430 | 42% |
| Advanced | £62,431 to £125,140 | 45% |
| Top | Above £125,140 | 48% |
Scottish status depends on where the employee lives, not where your business is. HMRC tells us through the S prefix on the tax code. National Insurance is the same across the UK.
Employee National Insurance.
Category A, monthly, 2026/27. Worked out on each month’s pay on its own; it is not cumulative like income tax.
0%
Up to £559
Below the Lower Earnings Limit. Does not count towards State Pension.
0%
£559.01 to £1,048
Up to the Primary Threshold. Nothing paid, but counts towards State Pension.
8%
£1,048.01 to £4,189
Main rate, up to the Upper Earnings Limit.
2%
Above £4,189
Reduced rate on the excess.
Weekly equivalents: £129, £242 and £967. Annual: £6,708, £12,570 and £50,270. Unchanged for 2027/28.
Directors: company directors normally pay National Insurance on an annual basis, so their monthly deductions may look different.
National Insurance category letters.
| Letter | Who it is for |
|---|---|
| A | Most employees |
| M | Employees under 21 |
| H | Apprentices under 25 |
| V | Veterans in their first 12 months of civilian employment |
| C | Over State Pension age: no employee NI, but employer NI is still due |
| B | Married women and widows with a valid reduced rate election |
| J | Employees who defer NI because they pay it in another job |
Freeport and Investment Zone letters (F, I, L, S, N, E, D and K) apply only at those special tax sites.
Student and postgraduate loans.
| Plan | Monthly threshold | Rate |
|---|---|---|
| Plan 1 | £2,241.66 | 9% |
| Plan 2 | £2,448.75 | 9% |
| Plan 4 (Scotland) | £2,816.25 | 9% |
| Plan 5 | £2,083.33 | 9% |
| Postgraduate loan | £1,750.00 | 6% |
Once HMRC or the employee tells us about a loan, we deduct repayments on pay above the threshold, rounded down to the nearest pound. A postgraduate loan can run alongside one other plan.
Priya earns £3,000 a month on Plan 2. (£3,000 − £2,448.75) × 9% = £49.61, so £49 is deducted.
Worked example: a monthly payslip.
Alex is 30, works in England, has tax code 1257L and NI category A, and earns £3,000 a month. Alex pays 5% pension under a net pay arrangement.
| Item | Calculation | Amount |
|---|---|---|
| Gross pay | £3,000.00 | |
| Pension | (£3,000 − £520) × 5% | −£124.00 |
| Income tax | (£3,000 − £124 − £1,048) × 20% | −£365.60 |
| Employee NI | (£3,000 − £1,048) × 8% | −£156.16 |
| Net pay | £2,354.24 |
Illustrative figures. Payroll software uses HMRC’s exact tables, so results may differ by a few pence.
04
Employer costs.
Employer National Insurance, the reliefs available and what an employee really costs you.
Employer National Insurance.
A cost to the business, paid on top of salary. It is never deducted from the employee’s pay. Category A, monthly, 2026/27.
0%
Up to £417 a month
The Secondary Threshold: £96 a week, £5,000 a year. Unchanged for 2027/28.
15%
Above £417 a month
There is no upper limit for employer NI.
Salary £3,000 a month.
Employer NI: (£3,000 − £417) × 15% = £387.45
Salary £5,000 a month.
Employer NI: (£5,000 − £417) × 15% = £687.45
Employee NI: £251.28 at 8% plus £16.22 at 2% = £267.50
Reliefs for younger staff and veterans.
For these employees, no employer NI is due on pay up to £4,189 a month (£50,270 a year). Employer NI at 15% applies only above that.
Under 21.
Apprentice under 25.
Veteran.
First 12 months of civilian work
Jordan is 19 and earns £2,000 a month. Employer NI is nil (a standard employee would cost £237.45). Employee NI is still due as normal: (£2,000 − £1,048) × 8% = £76.16.
Please give us every employee’s date of birth and tell us about apprentices and veterans.
Employment Allowance.
£10,500
off your annual employer NI bill for 2026/27, if you are eligible.
- Claimed through payroll and used against employer NI until it runs out.
- It cannot be used against Class 1A NI on benefits.
- A company is not eligible if its only employee paid above the Secondary Threshold is a director.
- Connected businesses can claim only one allowance between them.
We will confirm your eligibility at onboarding and at the start of each tax year.
The true cost of an employee.
Alex earns £3,000 a month (£36,000 a year).
| Cost to the business | Per month |
|---|---|
| Gross salary | £3,000.00 |
| Employer NI: (£3,000 − £417) × 15% | £387.45 |
| Employer pension: (£3,000 − £520) × 3% | £74.40 |
| Total monthly cost | £3,461.85 |
£41,542
for a £36,000 salary, before any Employment Allowance.
05
Workplace pensions.
Automatic enrolment, minimum contributions, opting out and how tax relief is given.
Automatic enrolment: who joins.
Must be enrolled.
Aged 22 to State Pension age, earning over £10,000 a year (£833 a month) and working in the UK.
Can opt in.
Aged 16 to 74 and earning over £6,240 a year, but not eligible for automatic enrolment. You must contribute if they opt in.
Can ask to join.
Aged 16 to 74 and earning £6,240 a year or less. You must arrange membership but need not contribute.
You must also complete a declaration of compliance with The Pensions Regulator within five months of your duties start date.
Automatic enrolment thresholds.
| Threshold (2026/27) | Annual | Monthly |
|---|---|---|
| Earnings trigger | £10,000 | £833 |
| Lower level of qualifying earnings | £6,240 | £520 |
| Upper level of qualifying earnings | £50,270 | £4,189 |
Minimum contributions are worked out on qualifying earnings: pay between the lower and upper levels.
On a salary of £3,000 a month, qualifying earnings are £3,000 − £520 = £2,480.
Minimum pension contributions.
3%
of qualifying earnings
5%
including tax relief
8%
minimum in total
You may pay more than the minimum, and you may pay the employee’s share for them. Contributions must reach the pension provider by the legal deadline: generally the 22nd of the month after deduction, if paid electronically.
Opting out and re-enrolment.
Opting out.
Within one month of enrolment. The request must come from the employee, usually through the provider. Contributions already taken are refunded in full.
Never encourage it.
You must not encourage or induce anyone to opt out.
Leaving later.
After the opt-out period, an employee can stop contributing, but money already paid in stays in the pension.
Re-enrolment.
Every three years, re-enrol eligible staff who have left the scheme and complete a re-declaration with The Pensions Regulator.
Postponement.
You may postpone enrolment for up to three months, if you give written notice.
How pension tax relief is given.
Net pay arrangement.
The employee’s contribution is taken before income tax is worked out, so relief is given straight away through payroll.
Relief at source.
The contribution is taken after tax. The provider claims 20% from HMRC and adds it to the pot. Higher rate taxpayers claim the rest through Self Assessment.
Salary sacrifice.
The employee gives up salary and you pay it into the pension instead. Only this method also saves National Insurance.
Worked example: pension contributions.
Alex earns £3,000 a month. Qualifying earnings are £3,000 − £520 = £2,480.
| Contribution | Calculation | Amount |
|---|---|---|
| Employer, 3% | £2,480 × 3% | £74.40 |
| Employee, 5% | £2,480 × 5% | £124.00 |
Net pay arrangement.
£124.00 is deducted before tax, saving Alex £24.80 in income tax.
Relief at source.
£99.20 is deducted from net pay. The provider claims £24.80 from HMRC, so £124.00 still reaches the pension.
06
Salary sacrifice.
How exchanging salary for pension contributions saves National Insurance, and the limits that apply.
What salary sacrifice is.
A contractual agreement where the employee gives up part of their salary in return for a non-cash benefit, such as an employer pension contribution or a bicycle for work.
Agree it first.
It must be agreed in writing before the pay is earned.
A lower salary.
The contract changes, so the lower salary is used for tax and NI.
Pensions.
Both employer and employee can save National Insurance.
Other benefits.
Most are taxed on the higher of the salary given up and the benefit’s normal taxable value.
Worked example: pension sacrifice.
Alex earns £3,000 a month and sacrifices £150 a month into the pension.
| Each month | Without sacrifice | With sacrifice | Saving |
|---|---|---|---|
| Salary | £3,000.00 | £2,850.00 | |
| Employee NI at 8% | £156.16 | £144.16 | £12.00 |
| Employer NI at 15% | £387.45 | £364.95 | £22.50 |
£414 a year
That is £34.50 a month (£12.00 + £22.50). Some employers pass all or part of their own saving into the employee’s pension.
Limits on salary sacrifice.
Minimum wage.
Sacrifice must not reduce cash pay below the National Minimum Wage.
Knock-on effects.
A lower salary can reduce statutory maternity pay, mortgage borrowing and some state benefits.
From 6 April 2029.
Only the first £2,000 a year of pension sacrifice will be free of NI. Amounts above that keep income tax relief but attract employee and employer NI.
The 2029 cap is set by the National Insurance Contributions (Employer Pensions Contributions) Act 2026.
07
Benefits in kind.
Reporting benefits today, Class 1A National Insurance, and the move to payrolling benefits from April 2027.
What a benefit in kind is.
Something of value an employee receives because of their job that is not paid as salary.
Common examples.
- A company car or van, and fuel for private use
- Private medical insurance
- A cheap or interest-free loan over £10,000
- Living accommodation
- Gym membership or other non-cash rewards
Usually taxable.
Most benefits are taxed on the employee and attract Class 1A NI for you.
Some are exempt.
For example, employer pension contributions and a work mobile phone.
Please tell us about every benefit you provide, including new ones during the year.
P11D and P11D(b): year-end reporting.
Benefits that are not taxed through payroll are reported after the tax year ends.
P11D.
One form per employee, showing each benefit’s taxable value. HMRC usually adjusts the employee’s tax code to collect the tax.
P11D(b).
One summary form showing the total Class 1A National Insurance you owe.
| Deadline | Action |
|---|---|
| 6 July | File P11D and P11D(b), and give each employee a copy of their P11D information |
| 22 July | Pay Class 1A NI electronically (19 July if paying by post) |
Class 1A National Insurance.
15%
of the taxable value of most benefits, for 2026/27. Paid by the employer only.
- The employee does not pay Class 1A.
- There is no threshold.
- Currently paid once a year, by 22 July after the tax year ends.
- Employment Allowance cannot be used against it.
Worked example: private medical cover.
You pay an annual premium of £1,200 for an employee’s private medical insurance.
| Item | Amount |
|---|---|
| Taxable value of the benefit | £1,200.00 |
| Employee’s extra income tax, basic rate taxpayer (20%) | £240.00 |
| Employee’s extra income tax, higher rate taxpayer (40%) | £480.00 |
| Your Class 1A NI (15%) | £180.00 |
Company cars and form P46(Car).
A company car available for private use is a taxable benefit, valued using its list price and CO2 emissions.
P46(Car) tells HMRC when you:
- first provide a car to an employee
- replace a car or provide an extra one
- withdraw a car
When it is filed.
Quarterly, within 28 days of each quarter ending 5 July, 5 October, 5 January and 5 April. It is not needed where car benefits are already payrolled.
Payrolling benefits from April 2027.
Phase 1.
- Company cars
- Car fuel
- Vans
- Van fuel
- Employer-provided medical benefits
Phase 2.
Most remaining benefits in kind.
Not yet mandatory.
Employment-related loans and living accommodation. These can still be payrolled voluntarily.
The taxable value is added to pay each month, so tax is collected as the year goes on, and Class 1A is reported and paid monthly through payroll.
HMRC has said final guidance for phase 1 will align with the Autumn Budget 2026. We will update this guide once it is confirmed.
What changes for you in 2027/28.
Monthly information.
We will need benefit details every month, not once a year.
Payslips change.
Tax codes will no longer include these benefits, and the benefit value will appear on payslips.
Two Class 1A bills in one year.
By 22 July 2027 you pay Class 1A for 2026/27 benefits, while also paying monthly on payrolled benefits. Please plan your cash flow.
P11D continues for now.
It remains for 2026/27 and for any benefits not yet payrolled.
08
Statutory payments.
Sick pay and family pay: who qualifies, how much is paid and what you can recover from HMRC.
Statutory payments: an overview.
SSP
Statutory Sick Pay
SMP
Statutory Maternity Pay
SPP
Statutory Paternity Pay
SAP
Statutory Adoption Pay
ShPP
Statutory Shared Parental Pay
SPBP
Statutory Parental Bereavement Pay
SNCP
Statutory Neonatal Care Pay
All are taxable and subject to NI like normal pay.
Statutory Sick Pay from April 2026.
Changes made by the Employment Rights Act 2025 apply from 6 April 2026.
Paid from day one.
The three unpaid waiting days have been removed.
No earnings minimum.
Lower-paid and part-time employees now qualify.
New rate.
The lower of £123.25 a week or 80% of average weekly earnings.
Up to 28 weeks.
Paid on the employee’s normal working (qualifying) days.
Average weekly earnings are normally worked out over the eight weeks before the absence. SSP cannot be recovered from HMRC.
Worked examples: sick pay.
Ben: standard rate.
Earns £500 a week, works 5 days, off sick for 3 days.
| Step | Amount |
|---|---|
| 80% of £500 | £400.00 |
| Weekly rate (the lower) | £123.25 |
| Daily rate (÷ 5) | £24.65 |
| SSP for 3 days | £73.95 |
Chloe: lower earner.
Earns £100 a week, works 5 days, off sick for 3 days.
| Step | Amount |
|---|---|
| 80% of £100 | £80.00 |
| Weekly rate (the lower) | £80.00 |
| Daily rate (÷ 5) | £16.00 |
| SSP for 3 days | £48.00 |
Statutory Maternity Pay.
Paid for up to 39 weeks:
90% of average weekly earnings
£194.32 a week, or 90% of average weekly earnings if lower
To qualify, the employee must normally:
- have worked for you for at least 26 weeks into the 15th week before the baby is due
- earn on average at least £129 a week (the Lower Earnings Limit)
- give the correct notice and medical evidence (form MATB1)
Worked example: maternity pay.
Daniela’s average weekly earnings are £600.
| Period | Calculation | Total |
|---|---|---|
| Weeks 1 to 6 | 90% × £600 = £540.00 × 6 | £3,240.00 |
| Weeks 7 to 39 | £194.32 × 33 | £6,412.56 |
| Total SMP | £9,652.56 |
109%
£10,521.29 recovered with Small Employers’ Relief
92%
£8,880.36 recovered by all other employers
Statutory Paternity Pay.
1 or 2 weeks
taken as one block or as two separate weeks
£194.32
a week, or 90% of average weekly earnings if lower
52 weeks
to take it, from the birth or placement
The same service and earnings conditions as maternity pay apply.
Ethan earns £800 a week and takes 2 weeks. 90% is £720, so the lower figure of £194.32 applies: £194.32 × 2 = £388.64.
Statutory Adoption Pay.
Paid on the same basis as maternity pay, for up to 39 weeks:
90% of average weekly earnings
£194.32 a week, or 90% of average weekly earnings if lower
To qualify, the employee must normally:
- have 26 weeks’ continuous service by the week they are matched with a child
- earn on average at least £129 a week
- give the correct notice and evidence of the adoption
Statutory Shared Parental Pay.
Lets parents share pay that would otherwise be paid as maternity or adoption pay.
- Ends early. The mother or primary adopter ends maternity or adoption pay early.
- Weeks shared. Up to 37 remaining weeks can be shared between both parents.
- Paid weekly. £194.32 a week, or 90% of average weekly earnings if lower.
Both parents must meet the eligibility conditions and give written notice.
Bereavement and neonatal pay.
| Payment | Who it is for | Rate | Duration |
|---|---|---|---|
| Parental Bereavement Pay | Employees who lose a child | £194.32 a week, or 90% if lower | Up to 2 weeks |
| Neonatal Care Pay | Parents whose baby needs neonatal care | £194.32 a week, or 90% if lower | Up to 12 weeks |
Please let us know straight away if either applies, so that pay is correct and recovery is claimed.
Recovering statutory payments.
You can recover statutory family pay (SMP, SPP, SAP, ShPP, SPBP and SNCP) by reducing what you pay HMRC each month.
109%
if your total Class 1 NI (employee plus employer) was £45,000 or less in the previous tax year. This is Small Employers’ Relief.
92%
if your total Class 1 NI for the previous tax year was more than £45,000.
SSP cannot be recovered. We claim recoveries for you through the Employer Payment Summary.
09
Childcare.
Childcare vouchers for existing members, and Tax-Free Childcare as the alternative.
Childcare vouchers.
| Employee’s tax rate | Weekly limit | Monthly limit |
|---|---|---|
| Basic rate | £55 | £243 |
| Higher rate | £28 | £124 |
| Additional rate | £25 | £110 |
Tax and NI free limits for members who joined from 6 April 2011. Vouchers provided through salary sacrifice must not take pay below the National Minimum Wage.
Tax-Free Childcare.
Employees who cannot join a voucher scheme may be able to use the Government’s Tax-Free Childcare scheme instead.
+£2
added by the Government for every £8 the parent pays in
£2,000
a year per child, or £4,000 for a disabled child
GOV.UK
parents apply online; no payroll or employer involvement
An employee cannot receive childcare vouchers and Tax-Free Childcare at the same time.
10
Working together.
What we need from you, what we send to HMRC, to you and to your employees, and the year-end timetable.
What you need to send us each month.
Please send by the agreed cut-off day each month. If nothing has changed, please confirm this so we can run payroll as normal.
Hours.
- Hours worked by hourly staff
- Overtime
- Sickness absence dates
- Holiday and unpaid leave
Pay amounts.
- Pay changes, with dates
- Bonuses, commission and allowances
- Expenses paid through payroll
- Deductions such as loans or court orders
Benefits.
- New, changed or withdrawn benefits, with value and dates
- Car list price, CO2, fuel type and dates
People.
- New starters
- Leavers and last working day
- Family leave notices
- Address or bank changes
What we send to HMRC.
Every pay period (RTI).
Full Payment Submission (FPS): on or before each pay day, reporting every employee’s pay and deductions.
Employer Payment Summary (EPS): by the 19th of the next month, when claiming Employment Allowance, recovering statutory pay, or when no one was paid.
Annual and other submissions.
- Final FPS or EPS: by 19 April, marked as the final submission for the year.
- P11D and P11D(b): by 6 July, for benefits not payrolled, where we are engaged to prepare them.
- P46(Car): quarterly, where needed.
We also send contribution files to your pension provider each month.
What we send to you and your staff.
To your employees.
- Payslip: every pay day, showing gross pay, each deduction and net pay
- P60: by 31 May, to everyone employed on 5 April
- P45: when someone leaves
- P11D copy: by 6 July, where benefits were not payrolled
To you.
- A payroll summary to approve each month
- The amount to pay HMRC, and the deadline
- The amount to pay your pension provider
- A year-end summary
Leavers: final pay and P45.
- You tell us the last working day and any final payments, such as untaken holiday.
- We include the leaving date on the final FPS.
- We issue a P45 showing pay and tax to date.
- The employee gives parts of the P45 to their new employer.
After the P45.
Payments made after a P45 is issued are taxed on code 0T, on a non-cumulative basis.
Settlements.
Termination payments above £30,000 have special rules. Please speak to us before agreeing any settlement.
Year end at a glance.
- 5 AprilTax year ends
- 19 AprilFinal FPS or EPS submitted
Alan Water - 31 MayP60s issued to employees
Alan Water, then you - 6 JulyP11D and P11D(b) filed; copies to employees
Alan Water and you - 22 JulyClass 1A NI paid to HMRC
You
22 July applies to electronic payment; the deadline is 19 July if paying by post.
Penalties and how to avoid them.
Penalties can arise for:
- late Full Payment Submissions
- late payment of PAYE and National Insurance
- late or incorrect P11D and P11D(b)
- not paying the National Minimum Wage
- missing automatic enrolment duties (The Pensions Regulator)
The best protection.
Send us complete information by the cut-off date, and pay HMRC and the pension provider by the deadlines we give you.
Record keeping.
| Records | Keep for at least |
|---|---|
| Pay, deductions, benefits, expenses, statutory payments and payments to HMRC | 3 years after the end of the tax year |
| National Minimum Wage records, including hours worked | 6 years |
| Automatic enrolment records | 6 years |
| Pension opt-out notices and records | 4 years |
| Right to work checks | For the employment, plus 2 years after it ends |
We keep copies of what we prepare, but please also keep your own records.
Changes coming in 2027/28 and beyond.
| From | Change |
|---|---|
| 1 April 2027 | National Living Wage rises to £13.21; 18 to 20 rate £11.27; under 18 and apprentice rate £8.31 |
| 6 April 2027 | Mandatory payrolling of cars, car fuel, vans, van fuel and medical benefits |
| 6 April 2027 | Income tax bands, Primary Threshold, Upper Earnings Limit and Secondary Threshold stay frozen |
| 6 April 2028 | Mandatory payrolling extends to most other benefits |
| 6 April 2029 | £2,000 cap on NI-free pension salary sacrifice |
We update this guide before each new tax year.
Talk to us about your payroll.
Whether you are taking on your first employee or moving an existing payroll, we can run it for you accurately and on time, and keep you up to date as the rules change.