What do you need to do to be ready for the new tax year?

26 March 2021

The end of year process is a busy time for businesses, especially those in payroll or finance. However, it is important to remember what comes next. With the new tax year, there will always come new items to consider, ensuring compliance with new legislation and that, as an employer, you are working as efficiently as possible. 

Here are a few things that you may want to think about and plan for ahead of April 6.

  • IR35 - the need to enrol contractors via a payroll as an ‘off payroll worker’ will come into effect in the new tax year. This means a review of the status of any contractors will need to be done so any that fall into the boundaries of IR35 are moved onto payroll as an off-payroll worker in April. 

For more information on IR35 please visit our IR35 hub.

  • Employment allowance - Following the eligibility criteria change in April 2020 it is important to review your eligibility for the employment allowance prior to the start of the tax year to ensure you are still eligible to receive the £4000 credit for the 2021/22 tax year. If circumstances of an employer have changed they may no longer be eligible to receive the payment.

For the list of criteria click here.

  • National Minimum Wage (NMW) and National living wage (NLW) - the rates change on 1 April 2021. This will apply to all workers in the UK and if employers fail to pay these hourly rates there can be severe penalties applied by HMRC. See below the new rates for NMW as well as NLW which is now applicable to employees 23 and older. 

NLW for workers aged 23 and over -  £8.91 (from £8.72) per hour
NMW for workers aged 21 to 22 - £8.36 (from £8.20) per hour
NMW for workers aged 18 to 20 - £6.56 (from £6.45) per hour
NMW for workers under 18 - £4.62 (from £4.55) per hour
Apprentices under 19 - £4.30 (from £4.15) per hour

  • Final submissions - The deadline for the final Full Payment Submission (FPS) is 19 April 2021. From 20 April 2021, the Earlier Year Update (EYU) will no longer be valid for amendments and these will need to be submitted using an in-year FPS.

For a full checklist of Year end tasks and deadlines please click here.

  • Scottish Student loans - From 6 April 2021 anyone on Scottish Student Loans will need to move from repayment plan 1 to repayment plan 4. This will automatically be done and HMRC will send SL1s out to be applied to payroll. However, Employers must ensure that they use the new starter checklist from April 2021. Plan 4 has an increase on the earnings threshold and will mean employees can earn £2063 a month before tax before having to start repayments. You can access the new starter checklist here.

There will be many processes happening in every business as we progress through Year End. By keeping thoughts on some of the above upcoming changes, the new tax year should go smoothly.

If you have any queries about these changes or for more information, please contact Simon Balaam.