After an extraordinary (tax) year, it’s time to prepare for the 2021/22 tax year. What are the key things to ensure your payroll software can cope with?

Testing times

 If there’s one thing that’s become crystal clear in the last few months of the 2020/21 tax year, it’s that payroll software developers have had an uphill struggle to get all the information they need in time for you to run the first payrolls of the new tax year. With this in mind, it’s understandable that development time has been shortened. So you need to be even more careful than normal to rigorously test your software ahead of that first payroll run, or at the very least carry out some sample checks on the first payslips of the new year.

Pro advice

Sample check: a new starter, a leaver, a representative sample of tax and NI calculations ensuring that tax codes have moved on appropriately for each part of the UK, some employees in receipt of statutory payments. Finally test that the apprenticeship levy has been calculated correctly.

Tax codes

As well as uplifting all L suffix codes by seven points, ensure that the non-cumulative indicators (week 1/month 1) have been removed. For all new starters joining you who left a job in the previous tax year but whose start date is between 6th April and 24th May, ensure the code is uplifted by seven points if their P45 has an L suffix.

National Minimum Wage

The national minimum wage (NMW) increases for pay periods that begin on or after 1st April 2021. There is also a change in age eligibility for the top rate. Anyone who receives SMP and will receive an NMW uplift must have this increase applied to the weekly earnings used to calculate their SMP. They are then paid the resultant addition in the higher rate value of SMP, or the standard rate if they were not formerly eligible for the full standard rate due to low earnings.

Deferral certificates

This time last year, HMRC was very late in issuing NI deferral certificates to employers. These authorise you to operate only 2% employee NI contributions for those who already pay maximum NI in another employment. You must have certificate CA2700 before operating table J for the new tax year.

Given the lack of development time, you need to be even more careful than usual in testing your software ahead of the first payroll run. Sample check a new starter, a leaver, and some employees in receipt of statutory payments.

For any help or advice on your payroll, contact Unique Payroll today by calling 01473 461 028, via email contactus@uniquepayroll.co.uk, or by visiting  https://uniquepayroll.co.uk/.