What payroll tax changes do you need to be aware of?
09/05/2023
Keeping up to date with tax changes is crucial to ensure compliance and avoid potential penalties.
With the new tax year in full swing, you must be aware of the recent changes that affect your payroll process.
What has changed?
National Living Wage increase
As of 1 April 2023, the National Minimum Wage (NMW) and National Living Wage increased.
So, you must ensure you are paying your employees correctly.
The new rates are as follows:
23 and over | 21 to 22 | 18 to 20 | Under 18 | Apprentice | |
April 2023 | £10.42 | £10.18 | £7.49 | £5.28 | £5.28 |
Learn more about how you can comply with minimum wage laws here.
Increase in Statutory Payments
As an employer, you must also comply with statutory payment regulations, which changed in April 2023.
The weekly rate for Statutory Sick Pay (SSP) has increased to £109.40 for the current tax year.
This rate applies to all employees but the amount that you must pay depends on the number of qualifying days that they work each week.
The amount due can be calculated using this tool.
There have also been changes to Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay.
Further guidance on the new rates can be found here.
Online submission for P11D forms
Another change, as part of the digitisation of the tax system, is that you must submit your P11D and P11D(b) forms for the 2022/23 tax year electronically. This is due on 6 July 2023.
You can submit your forms through your payroll software or HM Revenue & Customs (HMRC) PAYE service.
You can find out more about your P11D obligations in our previous blog.
Do you need to prepare for MTD for ITSA?
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is set to come into effect in 2026.
So, if you are a sole trader or landlord you need to consider how the switch to MTD will impact you.
If you earn above £50,000 per year you will need to use MTD-compliant software to file your tax returns, as well as keeping digital records from April 2026.
You will also need to submit quarterly reports on your business income and expenditure to HMRC.
An annual End of Period Statement and a Final Declaration must also be submitted to HMRC, which can be done via your MTD software.
Tax laws are constantly changing but it is essential to keep up-to-date and appropriately respond to these.
Keeping on top of the latest tax changes will ensure that your employees are paid correctly, which will maintain their satisfaction, and that you don’t fall foul of the law.
For advice on preparing for upcoming changes and complying with payroll regulations, contact our experts today.