Payroll looks straightforward from the outside. Agree a salary, work
out the deductions and pay the employee. In practice, every pay run
brings together tax codes, National Insurance, pensions, statutory pay,
starters, leavers, changing hours and fixed reporting deadlines.
Most payroll problems are not caused by a complicated calculation.
They start with late or incomplete information: a new starter arrives
without the right details, overtime is approved after the cut-off, a pay
rise is not passed on, or a submission is made after payday.
For Salisbury and Wiltshire employers, the safest approach is to
treat payroll as a controlled monthly or weekly process, not a task to
squeeze in just before wages are due. Here are the main 2026
requirements and the practical habits that help keep things
accurate.
Rates in this guide were checked on 20 August 2026 and relate
to the 2026/27 tax year. Payroll and employment rules change, so recheck
the official guidance if you read this at a later date.
1. Use the Correct 2026
Minimum Wage Rate
The National Minimum Wage and National Living Wage rates changed on 1
April 2026. The current hourly rates are:
| Worker | Minimum hourly rate from April 2026 |
|---|---|
| Aged 21 and over | £12.71 |
| Aged 18 to 20 | £10.85 |
| Under 18 | £8.00 |
| Apprentice rate | £8.00 |
The apprentice rate does not apply to every apprentice. It normally
applies if they are under 19, or aged 19 or over and still in the first
year of their apprenticeship, and assumes that they are on a genuine
apprenticeship with off-the-job training (e.g. day release to college).
Otherwise, the rate for their age applies. Check the current National Minimum
Wage rules and rates rather than relying on an old payroll note.
Compliance is not just a matter of checking the hourly rate written
in a contract. Overtime, salary sacrifice, unpaid time, deductions,
accommodation and the number of hours actually worked can all affect the
calculation. Salaried staff can also fall below the minimum wage if
their hours increase without their pay being reviewed.
Make minimum-wage checks part of the process when:
- A worker has a birthday that moves them into a new age band
- An apprentice completes their first year
- Pay, hours or deductions change
- A salaried employee regularly works beyond their contracted
hours - A salary-sacrifice arrangement is introduced or amended
Do not wait for the annual April rate change to review these
points.
2. Budget for the Full
Cost of Employment
Gross salary is only part of what an employee costs.
For most employees in 2026/27, employer National Insurance is 15% on
earnings above the relevant secondary threshold. The annual equivalent
of that threshold is £5,000, with weekly and monthly thresholds applied
through payroll and different rules for some National Insurance
categories. Employers may also need to budget for workplace pension
contributions, holiday pay, statutory payments, benefits, payroll
administration, equipment, training and cover for absence.
The official
2026/27 payroll rates and thresholds should be the reference point
for the calculations. Payroll software normally does the arithmetic, but
the business owner still needs to understand the total cost before
agreeing a salary or taking on another employee.
Eligible employers can reduce their employer National Insurance bill
using the Employment Allowance. They can potentially claim up to £10,500
against their employer Class 1 NIC bill in the 2026/27 period, but the
process is not automatic and not every employer qualifies.
Care should be taken determining eligibility where businesses or
charities are connected, where the employer carries out mainly
public-sector work, or where a limited company has only one director and
that director is the only employee liable for secondary Class 1 National
Insurance. Connected companies are subject to special rules because only
one company in the group can claim the allowance.
A useful habit is to prepare a full employment-cost budget before
recruiting. A role that appears affordable at basic salary may feel very
different once every recurring cost is included.
3. Apply the New
Statutory Sick Pay Rules
Statutory Sick Pay (SSP) changed on 6 April 2026.
Eligible employees can now receive SSP from the first full day of
sickness absence – the previous three-day unpaid waiting period was
removed.
The Lower Earnings Limit (LEL) was also removed – eligible employees
no longer have to earn a minimum of £125 per week to qualify for
SSP.
For 2026/27, SSP is the lower of 80% of the employee’s average weekly
earnings (calculated over the eight weeks before sickness starts) or the
flat rate of £123.25 per week.
The change means more absences can create a payroll payment from day
one. Employers should:
- Check that payroll software has been updated
- Remove old waiting-day and earnings-threshold wording from internal
processes - Record the first day, qualifying days and duration of each absence
accurately - Make sure managers send sickness information before the payroll
cut-off - Check transitional guidance for an absence that began before 6 April
2026
The government has published a summary
of the 2026 Statutory Sick Pay changes. Company sick-pay policies
may be more generous than the statutory minimum, so the payroll
treatment must also reflect the employee’s contract and the employer’s
policy.
4. Get Starter,
Leaver and Change Information Right
A regular salary can run smoothly for months. The mistakes tend to
appear when something changes.
For a new starter, collect the required personal details and P45
before the first payroll cut-off. If there is no P45, use HMRC’s starter
checklist. Confirm the start date, agreed pay, pay frequency, tax
information, National Insurance number, pension position and bank
details through a secure process.
For a leaver, confirm the final working date and every element of
final pay. That may include salary, overtime, holiday pay, deductions,
bonuses or other adjustments. The leaving information needs to be
reported and a P45 produced.
During employment, create one route for reporting changes such
as:
- Pay rises and bonuses
- Overtime or variable hours
- Unpaid leave and sickness
- Family-related or neonatal leave and pay
- Pension changes
- Benefits or deductions
- A change of address or other personal details
- A director appointment
Verbal messages and scattered emails are easy to miss. A standard
payroll-change form, named approver and firm cut-off date create a much
better audit trail.
Payroll overlaps with employment law and HR, but those are not the
same service. Your payroll provider can process accurate information and
flag an issue. Employment contracts, disciplinary matters, leave
entitlement and other legal questions may need a qualified HR or
employment-law adviser.
5. Send Real Time
Information on Time
Every time employees are paid, the employer normally needs to send a
Full Payment Submission, or FPS, to HMRC through its payroll software
on or before payday.
That remains true if the employer pays HMRC quarterly. It also
applies when employees are paid early for a bank holiday or Christmas,
although HMRC has specific guidance on which payment date to report. If
the FPS is late without a valid reason, warnings and penalties can
follow.
HMRC’s FPS
guidance also explains when an Employer Payment Summary, or EPS, is
needed. This can include months when no employees are paid or when the
employer needs to report a reduction in the amount due.
Build the timetable backwards from payday:
- Set a deadline for managers or the owner to approve changes
- Supply complete payroll information by the agreed cut-off
- Process and check the draft payroll
- Resolve questions before final approval
- Submit the FPS on or before payday
- Release wages and retain the reports securely
Last-minute changes sometimes happen, but they should be the
exception rather than the normal process.
6. Pay HMRC by the Correct
Deadline
Running payroll and paying employees does not finish the job. The
PAYE bill also needs to reach HMRC on time.
Monthly electronic payments are generally due by the 22nd of the
following tax month. Quarterly electronic payments are due by the 22nd
after the end of the quarter. If payment is made by post, the deadline
is normally the 19th. HMRC can charge interest and penalties for late
payment.
Check the balance in the employer’s HMRC account against the FPS and
any EPS before paying. Do not assume that the amount taken from the bank
for net wages is the total payroll cost. Income Tax, employee and
employer National Insurance, student-loan deductions and other items may
still be due to HMRC.
The current payment timetable is set out in HMRC’s guide to paying employers’ PAYE.
7. Keep
Workplace Pension Duties in the Payroll Cycle
Automatic enrolment is an ongoing duty, not a one-off job completed
when the pension scheme was set up.
In 2026/27, the annual earnings trigger for automatic enrolment
remains £10,000. The qualifying-earnings band runs from £6,240 to
£50,270, with equivalent thresholds for weekly and monthly payrolls.
Age, earnings and employment circumstances determine what the employer
needs to do.
Employees must be assessed on the correct pay information each
period. Employers also need to handle opt-ins, joining requests,
opt-outs and contribution changes, send the required communications, pay
contributions to the pension scheme and complete re-enrolment and
re-declaration duties when due.
The Pensions Regulator publishes the current automatic-enrolment
earnings thresholds. Even when an accountant or payroll bureau
processes the calculations, the employer remains responsible for meeting
its legal duties and supplying correct information.
8. Do Not Lose Sight of
Year-End Tasks
Payroll is repetitive, which makes annual deadlines surprisingly easy
to miss.
At the end of the tax year, employers need to send the final payroll
report, update records and software for the new year, and give employees
a P60 by 31 May. Relevant employee expenses and benefits normally need
to be reported by 6 July, with associated payment deadlines depending on
how they are handled.
HMRC’s payroll
annual-reporting guide is a useful checklist. Add the dates to the
business calendar rather than relying on someone remembering them in May
or July.
Year end is also a sensible time to review:
- Employee details and National Insurance categories
- Director payroll settings
- Pension contribution records
- Benefits and expenses
- Employment Allowance eligibility
- Payroll software and access permissions
- The accuracy of year-to-date balances
A Simple Payroll
Compliance Checklist
Before approving each pay run, ask:
If several people are involved in running payroll, write down who
owns each step. Payroll is much less stressful when the process does not
depend on one person remembering everything.
*HMRC’s strict legal minimum retention period for PAYE/payroll records
is three years from the end of the tax year to which they relate.
However, many HR and payroll professionals recommend a 6 year retention
period to align with other legal requirements and company tax rules.
Payroll Services for
Salisbury Employers
Outsourcing payroll does not remove the employer’s responsibilities,
but it can replace a fragile last-minute task with a clear and
repeatable process.
Caboodle provides payroll
services for Salisbury employers, including agreed payroll
calculations, PAYE and National Insurance, Real Time Information
submissions, payslips, starters, leavers, pensions support and year-end
documents. The exact scope and cut-off are agreed around the
business.
Our enthusiastic team also connects payroll
with the wider picture, including bookkeeping, accounts and
tax. If your current payroll process relies on rushed emails, uncertain
deadlines or one person holding everything in their head, see how we work with clients or get in touch for a no-pressure conversation.