Surrey-based accountancy firm TWP has issued a word of warning to SMEs and independent businesses as the payroll tide turns once more – with a wave of new regulations set to come into force between April and July 2024.

Most critical, said the firm, is the rising rates of National Minimum Wage and National Living Wage and fall in employee National Insurance Contributions to eight percent.

Representing a significant boost to employees, getting it wrong could cost employers substantially if staff are paid or taxed at incorrect rates.

‘Preparation is key’ was the message delivered by the firm, which provides a full range of personal and commercial accounting services in the South East.

It further stressed certain sectors were more open to risk and error than others, urging operators in these industries to get to know their obligations.

Employers with irregular or part-year workers must stay updated on changes to the Working Time Regulations 1998, with a key change in how holiday accrual and pay is calculated for these groups – at 12.07 per cent of hours worked in a pay period.

Additionally, TWP said, hospitality and related sectors where gratuity is common should be prepared for the Employment (Allocation of Tips) Act 2023, coming into force later in 2024.

This will require employers to pass on all tips equitably to employees without withholding a percentage to cover administrative or payment costs.

Ultimately, said the firm, preparing for new payroll updates is about balancing the financial needs and rights of employees with the administrative needs of the employer.

Paul Hawkesley, Managing Partner at TWP, said: “The upcoming changes to how employees are paid and allocated holiday carry significant implications for employers.

“What’s most important here is to stay updated and ensure that you follow new regulations as they come in. Prioritising compliance is key at times of change, particularly for SMEs and independent businesses.

“These are the businesses which might face the most difficulty in meeting complex legislative requirements without external support.

“With new obligations for employers coming in on all sides, it’s natural to feel that payroll is something intimidating or out of your control.

“This doesn’t have to be the way forward. I’d urge anyone who needs support with their payroll to get in touch with us and see how easy it can be.”