April brings a new tax environment for businesses. National Minimum Wage (NMW) increases, frozen tax thresholds, expanded statutory obligations and a much tougher enforcement regime will all be switched on at the same time.

Year-end is always a chaotic time, and these changes are ramping up the pressure. Preparing for the changes extend beyond loading new rates as businesses need to make sure the entire framework works as it should when those rates go live.

Businesses should be using these final few weeks to run checks on salary sacrifice compliance, exception reports and statutory payment updates.

Payroll and finance leaders need to make sure controls are fit for purpose so that deductions, salary sacrifice, statutory payments and working practices will stand up to scrutiny.

NMW increases: where the compliance risk sits

From 1 April, new NMW and National Living Wage rates kick in across all age bands.

Frozen tax and National Insurance (NI) thresholds mean take-home pay is still under pressure. As a result, employees are expected to lean more heavily on salary sacrifice, benefits deductions and flexible rewards. Any one of these strategies could push a pay packet below NMW if businesses are not watching closely.

To protect against NMW non-compliance, make sure you've:

• Loaded April rates and tested them in parallel runs.
• Set up exception reports to flag anyone paid at or near NMW once all deductions are applied.
• Stress-tested pay structures for part-time staff, irregular hours workers and anyone on variable pay.

A one-off compliance check won't be sufficient. Monitoring NMW compliance has to be dynamic, especially when hours or deductions change month to month.

Salary sacrifice risks: what payroll teams must review

Salary sacrifice is still legitimate and valuable, particularly for pensions. However, it is also one of the easiest ways to breach NMW without realising it.

With April rate increases someone’s arrangements that were compliant last month might not be this month, and auto-enrolment changes can tip people’s contributions over the threshold.

Benefits like electric vehicles, tech schemes or holiday purchase all need to be reviewed to make sure they don’t inadvertently cause an NMW breach.

What you need to do now:

• Re-run your NMW assessments using April rates.
• Identify who needs to be pulled out of sacrifice arrangements post-April.
• Check your system controls prevent sacrifice where it would breach NMW.
• Document your decisions and how you communicated them.

The Fair Work Agency launches in April (subject to final regulations and guidance) and will be quick to pick up on and penalise salary sacrifice errors.

Statutory payment updates: getting the detail right

April also brings changes to statutory payment rates, notably to Statutory Sick Pay under the Employment Rights Act.

The removal of the three-day waiting period and the Lower Earnings Limit means SSP now applies from day one and covers far more people.

To ensure compliance, check that:

• Your payroll system is configured correctly for the new SSP triggers.
• Policies, contracts and manager guidance all say the same thing.
• Absence reporting feeds cleanly into payroll.
• Your cost modelling reflects the increased SSP exposure.

Misalignment between your policy and payroll system is a common way underpayments happen.

Year-end payroll readiness: controls that need attention

Year-end is when historic payroll problems surface, and April is likely to exacerbate them.

Before you close year-end, make sure:

• Payroll, HR and finance data reconciles cleanly.
• Variance reports flag anything unusual in pay or deductions.
• Maker-checker controls are effective for sensitive changes.
• Payslips are clear for people to understand.

Taking these steps is essential. Under the Employment Rights Act framework, being able to prove compliance is vital.

Changing enforcement: what employers should expect

The Fair Work Agency is a new enforcement body. Its role is to move away from reactive enforcement to proactive, data-led intervention.

When the FWA is established, expect:

• Retrospective reviews going back up to six years.
• Financial penalties of up to 200% of any underpayment.
• Public naming if you get it wrong.
• Personal accountability for directors and senior managers.

In that context, April payroll changes are an important test of your governance, controls and oversight.

Make sure you have:

• Clear ownership of NMW compliance.
• Documented processes with proper audit trails.
• Regular internal reviews.

Final pre-April payroll compliance checklist

Before April rates go live, you should be able to confidently say:

• April NMW and statutory rates are loaded, tested and signed off.
• Salary sacrifice schemes have been re-assessed against April thresholds.
• Exception reporting will catch NMW risks in real time.
• SSP configuration reflects the new day-one rules.
• Policies, payroll and manager guidance all align.
• Year-end reconciliations have flagged and fixed any issues.
• Compliance decisions are documented and defensible.

Why April payroll compliance matters for employers

April payroll changes sit at the intersection of rising costs, expanded worker protections and much tougher enforcement. If you prepare properly, moving through these changes is manageable.

Year-end should be a time to tighten controls and lay the essential groundwork for the year ahead to protect organisational credibility.

If you would like to discuss your April 2026 compliance readiness and the related changes such as NMW April rate changes, please contact Steve Sweetlove or your usual RSM contact.

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