A new tax year checklist helps a UK business confirm that its payroll, bookkeeping and compliance systems are ready for the year beginning on 6 April. April is an appropriate time to update payroll records, review employee pay, check pension duties and make sure the accounting software is using the correct settings.
Not every April task applies to every business. A company’s financial year may end on a completely different date, while VAT periods normally follow their own quarterly or monthly cycle. The tax-year change nevertheless affects every employer and can also provide a useful annual checkpoint for sole traders, directors and growing businesses.
This checklist reflects the 2026 to 2027 tax year. Rates and thresholds can change, so businesses should confirm current information before processing payroll or making tax decisions.
New tax year checklist for 2026 to 2027
The principal April bookkeeping tasks include completing the previous payroll year, updating payroll software, checking employee tax codes, reviewing National Insurance settings and applying the new minimum wage rates.
Employers should also review pension records, payroll benefits, mileage policies and any new statutory payment rates.
Outside payroll, April is a useful time to review bookkeeping workflows, bank access, VAT turnover, the chart of accounts, budgets and document-retention arrangements.
The purpose is not to make unnecessary changes every April. It is to confirm that the existing system still reflects the business and the current rules.
1. Complete the final payroll report for the previous year
The final payroll report for the year ending 5 April should be sent to HMRC on or before the relevant employee payday.
The final Full Payment Submission should contain the normal pay and deduction information. The employer must also indicate that it is the final submission for the tax year through the appropriate payroll process.
Where no employees were paid in the final tax month, an Employer Payment Summary may be required instead.
HMRC’s payroll annual reporting guidance explains the tasks required at the end of one payroll year and the start of the next.
2. Check that the final payroll has been accepted
Posting a pay run in the accounting software does not prove that HMRC accepted the RTI submission.
The filing status should be checked for the final FPS or EPS. Any declined or unresolved submission should be investigated promptly.
Employee year-to-date pay, Income Tax, National Insurance, pension deductions and statutory payments should agree with the final payroll reports.
The employer’s PAYE liability should also be reconciled with payments already made and the amount still due to HMRC.
3. Update the payroll software
Payroll software should be updated before processing the first payday falling within the 2026 to 2027 tax year.
Cloud payroll products normally apply legislative updates automatically, but the employer should confirm that the correct tax year is active.
Desktop software may require an update or new annual version. The update should be completed before carrying forward employee records or creating the first April pay run.
A pay run calculated using the previous year’s thresholds may produce incorrect tax, National Insurance or statutory payment figures.
4. Update employee tax codes
HMRC may issue new employee tax-code notices before the start of the tax year.
The employer should apply the latest authorised code for each affected employee. Where HMRC has not issued a replacement, the existing authorised code is normally carried forward.
Week 1 and Month 1 indicators should not ordinarily be carried into the new tax year unless HMRC specifically instructs the employer to use them.
For 2026 to 2027, the standard Personal Allowance remains £12,570 and the common emergency code remains 1257L.
HMRC’s P9X guidance for 2026 to 2027 explains how employers should prepare employee tax codes for the new year.
5. Check National Insurance settings
Employee National Insurance categories and employer rates should be checked before the first April payroll.
For most category A employees in 2026 to 2027, employee National Insurance remains 8 per cent on earnings between the Primary Threshold and Upper Earnings Limit, followed by 2 per cent above the upper limit.
The employer National Insurance rate is generally 15 per cent above the applicable Secondary Threshold. For many employees, that threshold is £5,000 per year, equivalent to £417 per month or £96 per week.
Different thresholds and treatments can apply to apprentices, younger employees, veterans and other National Insurance categories.
HMRC’s 2026 to 2027 employer rates and thresholds provides the complete current figures.
6. Review Employment Allowance
Eligible employers can reduce their employer National Insurance liability through Employment Allowance.
The maximum Employment Allowance for 2026 to 2027 is £10,500.
Eligibility should be reviewed rather than assumed. Connected companies, public-sector work and businesses employing only certain directors may need particular consideration.
The claim is normally made through an Employer Payment Summary. The accounting records should reflect the reduced HMRC liability rather than leaving the full employer National Insurance amount outstanding.
7. Apply the new minimum wage rates
National Minimum Wage and National Living Wage rates change from 1 April rather than 6 April.
From 1 April 2026, the hourly rates are £12.71 for workers aged 21 and over, £10.85 for workers aged 18 to 20 and £8.00 for eligible workers under 18.
The apprentice rate is also £8.00 for apprentices under 19 and those aged 19 or over who are in the first year of their apprenticeship.
Employee pay templates should be updated from the first relevant pay period. Employers should also consider unpaid working time, training, salary sacrifice and deductions that can reduce pay for minimum-wage purposes.
8. Review salaries and regular payroll items
April is a useful time to compare recurring payroll entries with current contracts and authorised salary changes.
Check salaries, hourly rates, overtime arrangements, allowances, regular bonuses and employee deductions.
Directors’ salary arrangements should be reviewed with the accountant where necessary, particularly because tax efficiency depends on company circumstances, other income and eligibility for Employment Allowance.
Our guide to director salary and dividends explains why salary must be processed through payroll while dividends require separate records and sufficient distributable profits.
9. Check statutory payment rates
Statutory payment rates should be updated within the payroll software for qualifying absences beginning in the new tax year.
For 2026 to 2027, the standard weekly rate for Statutory Maternity Pay after the first six weeks and for several other family-related statutory payments is £194.32 or 90 per cent of average weekly earnings, whichever is lower.
The 2026 to 2027 Statutory Sick Pay rate is £123.25 per week or 80 per cent of average weekly earnings, whichever is lower under the applicable rules.
Eligibility and calculation can depend on dates and average earnings, so statutory payments should not be entered as a simple fixed allowance without checking the employee’s circumstances.
10. Review workplace pension settings
Workplace pension contribution settings should agree with the pension provider and the scheme’s certification basis.
Check employee and employer percentages, qualifying earnings thresholds, salary sacrifice arrangements and the pensionable treatment of bonuses or overtime.
The pension deduction shown in payroll should agree with the contribution schedule submitted to the provider.
Employees should not be removed from the pension merely because they ask informally. Opt-outs must follow the scheme’s permitted process.
11. Check the automatic re-enrolment date
Employers generally have automatic re-enrolment duties every three years.
Certain employees who previously left the pension scheme or reduced their contributions may need to be assessed and re-enrolled.
A re-declaration of compliance must also be completed, even where there is nobody to put back into the scheme.
The Pensions Regulator’s re-enrolment guidance explains how employers can check their dates and complete the process.
12. Prepare employee P60s
Employees still working for the business on 5 April must receive a P60 showing their total pay and deductions for the completed tax year.
The deadline for providing P60s is 31 May.
The final payroll reports should be checked before the forms are issued. Where an error is found later, the employer may need to provide a replacement P60 or written confirmation of the corrected information.
HMRC’s P60 guidance explains which employees must receive the form and the delivery deadline.
13. Prepare benefits and expenses reporting
Employers providing taxable benefits may need to report them through payroll or on forms P11D.
The general reporting deadline for employee expenses and benefits is 6 July following the end of the tax year.
Benefits can include company cars, private medical insurance, beneficial loans and certain personal expenses paid by the employer.
The employer should review payroll and bookkeeping records for payments that may represent taxable benefits rather than ordinary business expenditure.
14. Reconcile payroll with the bookkeeping
The final payroll reports should agree with the wages and payroll-liability accounts in the bookkeeping system.
Check gross wages, employer National Insurance, pension costs, PAYE, employee deductions and net pay.
Payments to employees, HMRC and pension providers should reduce the related liabilities rather than being posted as additional expenses.
Old payroll balances should be investigated before being carried into another year.
Our payroll services can include payroll calculations, RTI filings, payslips and reconciliation within an agreed monthly arrangement.
15. Review employee mileage rates
Employers reimbursing employees for business travel in their own vehicles should review the approved mileage rates and internal policy.
For tax purposes in 2026 to 2027, the approved car mileage rate is 55 pence per mile for the first 10,000 qualifying business miles, followed by 25 pence per mile.
The rates for motorcycles and cycles remain 24 pence and 20 pence per business mile respectively.
The employer should retain the journey date, purpose, destination and mileage rather than paying an unsupported monthly estimate.
16. Check VAT registration turnover
VAT does not operate according to the 6 April tax-year date, but April remains a useful time to review taxable turnover.
The compulsory VAT registration threshold remains £90,000. The historic test uses taxable turnover during the previous rolling 12 months, not only sales within a tax year or financial year.
A business approaching the threshold should maintain a monthly rolling schedule and distinguish taxable supplies from genuinely exempt or outside-the-scope income.
Our guide to VAT registration explains both the historic 12-month test and the separate next-30-days test.
17. Review the VAT scheme and software settings
VAT-registered businesses should confirm that their accounting software reflects the scheme agreed with HMRC.
This may include standard invoice accounting, cash accounting, annual accounting or the Flat Rate Scheme.
Default VAT codes should be reviewed for new sales activities, overseas transactions and reverse-charge purchases.
The business should not change schemes in the software without confirming the effective date and HMRC requirements.
18. Confirm Making Tax Digital access
The business should check that its compatible software remains authorised to communicate with HMRC.
Government Gateway access, delegated authority and user permissions can create filing problems where details are outdated.
The VAT registration number, return periods and scheme should agree with HMRC’s records.
Our VAT returns service can include bookkeeping review, reconciliation and MTD-compliant submission.
19. Reconcile all financial accounts
April provides an opportunity to confirm that bank, credit-card and payment-platform accounts are current and reconciled.
The balance in the accounting system should agree with the corresponding external statement for the same date.
Old unreconciled items, duplicated entries and incorrectly recorded transfers should be investigated.
Our guide to bank reconciliation in Xero explains why processing every bank-feed line is not the same as proving the account balance.
20. Review the chart of accounts
The chart of accounts should provide meaningful reports without containing large numbers of duplicate or obsolete categories.
Archive unused accounts where safe to do so and identify categories that have become general dumping grounds for unresolved spending.
New departments, services or revenue streams may require additional accounts or tracking categories.
Changes should support reporting needs rather than creating unnecessary detail that makes coding less consistent.
21. Clear suspense and query accounts
Suspense and uncategorised accounts should contain only items that are genuinely waiting for information.
Each old transaction should be investigated and moved to the correct account where suitable evidence is available.
A balance should not be cleared through miscellaneous expenses merely to make the account appear tidy.
Unresolved personal payments, loans or transfers may require advice from the accountant before correction.
22. Review customer and supplier balances
Run aged receivables and aged payables reports and examine old balances.
A customer invoice may appear unpaid because the receipt was recorded as new income rather than matched against the invoice.
A supplier bill may remain outstanding because its bank payment was posted directly to expenses.
Duplicate invoices, credit notes and disputed amounts should be identified before another year of balances accumulates.
23. Update the receipt-capture process
Check how employees, directors and business owners submit receipts and supplier invoices.
Documents should be uploaded or forwarded through one agreed process rather than scattered across email accounts, mobile phones and paper files.
The system should distinguish purchases paid directly by the business from employee expenses requiring reimbursement.
Our guide to Xero expenses explains how receipts and expense claims can be captured and approved digitally.
24. Review user access and security
Remove accounting-software access for employees, advisers and contractors who no longer require it.
Every active user should have an individual login and only the permissions needed for their role.
The business owner should retain suitable administrator access rather than relying entirely on an external provider’s account.
Bank-feed connections and Government Gateway users should also be reviewed where staff responsibilities have changed.
25. Update budgets and cash-flow forecasts
Where the business uses the tax year or 31 March as a planning period, April is the natural point to load a new budget.
Update expected sales, wages, employer National Insurance, pension costs, rent, software and other major overheads.
The forecast should also include VAT, PAYE, Corporation Tax and loan payments rather than focusing solely on operating costs.
Actual performance can then be compared with the plan from the first month of the new period.
26. Review bookkeeping responsibilities
Confirm who is responsible for transaction processing, document collection, payroll information, VAT approval and answering queries.
A process can fail even where accounting software is configured correctly if nobody owns the recurring tasks.
Set clear weekly and monthly deadlines for supplying information and completing reconciliations.
Where the owner no longer has sufficient time, the new tax year can be a practical point to transfer the work to an outsourced bookkeeper.
27. Check record-retention arrangements
Payroll, VAT, company and self-employed records must be retained for the applicable statutory periods.
The business should confirm that previous-year payroll reports, VAT Returns, invoices, bank statements and supporting calculations remain accessible.
Changing software providers or subscription levels should not result in the business losing access to records it is required to keep.
Important reports should be exported and stored securely where appropriate.
28. Review the previous year for recurring mistakes
April is a useful time to consider which bookkeeping problems occurred repeatedly.
These may include missing receipts, late employee information, unreconciled payment platforms or supplier bills recorded twice.
The new process should address the cause rather than simply correct the same errors again.
Our guide to common bookkeeping mistakes explains how recurring errors affect profit, VAT and balance-sheet reports.
29. Prepare for the first payroll of the new tax year
Before approving the first 2026 to 2027 pay run, compare employee records with current contracts and HMRC notices.
Review tax codes, National Insurance categories, pension settings, minimum wage compliance and year-to-date balances.
Check a draft payroll before filing the FPS. Gross pay, deductions and net pay should be compared with expected figures.
Our guide to Xero payroll setup explains the configuration and checks required before processing payroll.
30. Establish a monthly routine for the year ahead
The value of a new tax year checklist depends on the monthly process that follows it.
Bank accounts should be reconciled, documents collected and customer and supplier balances reviewed throughout the year.
VAT and payroll liabilities should be checked regularly so upcoming payments do not come as a surprise.
Our article on good bookkeeping habits provides a practical routine for keeping the records current.
Getting help with your new tax year checklist
Bookkeeping Packages Ltd can review accounting software, payroll records, VAT settings, bank reconciliations and outstanding bookkeeping tasks.
Where the records are already current, the April review can form part of the normal monthly process. Where a backlog or historical error is identified, catch-up work may need to be agreed separately.
Our bookkeeping services can include transaction processing, bank reconciliation, VAT records, payroll support and monthly reporting.
To discuss your new tax year checklist and ongoing bookkeeping requirements, use the Bookkeeping Packages enquiry form or call 0161 531 0087.
About the Author
Stuart Kerr is Managing Director of Bookkeeping Packages Ltd, an outsourced bookkeeping service supporting UK small businesses and accountancy practices. With over 20 years of bookkeeping experience, Stuart specialises in helping businesses maintain reliable financial records and useful management information.
This article is provided for general information only. Stuart Kerr is a professional bookkeeper, not a tax, legal, employment or regulated financial adviser. Nothing in this article constitutes tax, legal, employment or financial advice. Rates and rules can change, and advice specific to your circumstances should be obtained from an appropriately qualified professional.