For small business owners, the end of the tax year is always a busy time. But this April is different. Alongside the usual payroll jobs, a wave of new employment laws take effect, the national minimum wage increases and a new government enforcement body launches. All at once.
To help business owners get through it without missing any of these important changes, BoostPay has published a free 20-point checklist covering every step. BoostPay Managing Director, Eileen Breeze, says it is the most important year-end resource the company has ever produced.
“The sheer volume of changes landing at the same time this year is unlike anything I’ve seen in 20 years. Most business owners are aware that something is changing, but they’re not always sure exactly what, how the changes link together and what order to deal with them in. Our checklist takes the guesswork out of it.”
Read on for what is changing, and what business owners need to do about it.
Step 1: Update your pay rates before the first April pay run
From April 1, the minimum wage goes up. Workers aged 21 and over must be paid at least £12.71 per hour, up from £12.21. Younger workers see their rates increase too. If anyone on your team is paid at or near the current minimum, their pay needs to be updated before you run April payroll. It sounds straightforward, but it is one of the most common oversights at this time of year especially for workers paid an annual salary rather than hourly rates.
Step 2: Check your sick pay policy
From April 6, the rules around Statutory Sick Pay change in two important ways. First, it becomes payable from the very first day an employee is off sick, rather than the fourth day. Second, more employees will qualify because the lower earnings threshold is being removed. The weekly rate also rises to £123.25. If your sickness policy still refers to the old rules, it needs updating now.
Step 3: Review your parental leave arrangements
Also from April 6, employees have the right to take paternity leave and unpaid parental leave from day one of their job. Under the old rules, they needed to have worked for you for six months or a year before qualifying. If you have taken on new staff recently, they may already have rights you have not yet factored in. It is worth reviewing your contracts and your leave policy before someone asks.
“These are not changes that can be dealt with after the fact. If an employee asks for paternity leave on April 7 and you are not ready, you have a problem. Getting ahead of it now takes an hour. Dealing with it later can take considerably longer.”
Step 4: Sort your year-end payroll admin
On top of the new rules, there is the standard year-end payroll cycle to complete. Make sure your final payroll submissions are marked correctly as year-end, issue P60s to all employees by May 31 and if you provide any employee benefits, the relevant forms are due by July 6. HMRC also issues updated tax codes at this time of year. Check that any changes have been picked up before the first April pay run goes out.
For businesses using umbrella companies or agency workers, there is an additional change to be aware of. From April 6, responsibility for making sure those workers are taxed correctly moves higher up the chain. If you are not sure whether your arrangements are compliant, now is the time to check.
Step 5: Get your accounts and cash flow in order
Beyond payroll, year-end is the right moment to look at the wider financial picture. Chase outstanding invoices, write off bad debts and make sure your accounts reflect the year accurately before they are filed. For directors, check that dividends taken are properly documented.
The combination of higher wage costs, extended sick pay and new leave entitlements means the cost of employing people is going up.
Step 6: Review your mortgage while your numbers are fresh
For directors and self-employed business owners, the period right after filing accounts is also one of the best times to look at your mortgage. Your income is clearly documented, your financial position is up-to-date and lenders can see a complete picture. If you draw a mix of salary and dividends, a standard affordability check does not always reflect what you can genuinely borrow. BoostPay Mortgages specialises in exactly this situation.
The BoostPay year-end checklist is free and available now at www.boostpay.co.uk/insights/year-end-checklist. It covers all 20 tasks across employment law, payroll, accounts and cash flow in a single page, so business owners can work through April with confidence.
