Whether you're attracting new, talented individuals to your business or rewarding your current staff, pay is probably one of the first things you need to think about.
According to the Office for National Statistics, median weekly earnings for full-time employees increased by 2.9% between April 2018 and April 2019, or by 0.9% when you take inflation into account.
Meanwhile, the number of low-paid jobs - defined by the OECD as those paid at less than two-thirds of median hourly earnings - fell to a record low of 16.2%.
If you're reviewing your employees' pay this year, or if you're hiring a new member of staff but don't know where to start, there are a few things to consider.
How will you pay your staff?
If you're employing your first members of staff or if you're hiring for a new role, you might need to think about how best to arrange pay - by the hour, based on an annual salary, or by each piece of work completed, for example.
You could also consider different pay schemes. Will you pay a basic, set rate for all of your employees' work, will you set up incentives in the form of commission and bonuses, or will you use a combination of both?
Employee benefits are another thing to consider, as these can offer an added incentive to staff, and some may be tax deductible.
How much will you pay?
Once you know your method for paying your staff in 2020/21, you'll need to work out how much it should be and agree that amount with the employee.
It goes without saying that this should be made clear in your employee's contract when you hire them, but you should also communicate clearly about your policy for pay rises.
Your legal obligations
You must meet the legal minimum requirements for the amount you pay your staff.
The national living wage, which applies to workers aged 25 or older, will increase by 6.2% from 1 April 2020, from £8.21 an hour to £8.72.
There are different rates for other age groups and a rate for apprentices, which are also changing in April. You can find the full list of new rates here.
Remember that working time includes the entire time someone is at work and required to be working, as well as certain work-related travelling.
The other side of deciding your pay is making sure it's enough to attract the talent you need.
Look at the pay offered by competitors to see how your business compares, and factor in regional differences, demand for your products or services, and the state of the jobs market.
Other considerations for payroll
National Insurance contributions
The threshold at which employees start paying class 1 national insurance contributions (NICs) is set to rise to £9,500 per year in 2020/2021, which HMRC says will save the average employee around £104.
All the other thresholds will rise with inflation, except for the upper NICs thresholds, which will remain frozen at £50,000.
Student loan thresholds
From 6 April 2020, the thresholds at which employees need to start repaying student loans will increase to £19,390 for those on plan one, and £26,575 for plan two.
Meanwhile, the postgraduate loan threshold will stay the same at £21,000.
If an employee's pay exceeds the threshold for the plan their student loan is on, you'll need to make sure the right deductions are made from their pay, and report those deductions to HMRC.
Any employee earning more than £10,000 a year, who's aged between 22 and state pension age, needs to be automatically enrolled into a workplace pension scheme.
The minimum employer contribution rate for auto-enrolment is set to remain at 3% of the employee's qualifying earnings in 2020/21, and minimum combined employee-employer contributions will stay at 8%.
Speak to us about running payroll.