Welcome to your October update for Tax Year 2025/2026. This update of the software includes some new enhancements, and necessary legislative changes. These notes provide information on improvements to the software.
Password Security Enhancements
To help keep your information safe, we’ve strengthened password security in Kashflow Payroll and Employee Self Service (ESS).
The next time you log in to Kashflow Payroll, or when employees log in to Employee Self Service, you’ll see a message asking you to reset your password. A secure link will be provided to guide you through the update.
Regularly changing your password helps protect your account from unauthorised access and keeps your data more secure.
NHS Pension Scheme changes (England & Wales)
We have updated the pension tier threshold for the NHS Pension Scheme in England & Wales for 2025/2026, in line with changes that were announced in July 2025, and approved by Parliament in October 2025. However, these changes are to be backdated to 1st April 2025 as instructed by the scheme administrators.
To support this update, the following software changes have been implemented and will be effective once your current pay period is finalised. For example, if your current pay period is October, the changes will be applied during the Finalise process and applied in November:
- Updated NHS Pension Scheme thresholds in line with the NHS Pension Scheme changes, effective from 1st April 2025
- Automatic reassessment of employees: Prior to the next payroll run, the system will automatically assess employees’ pensionable pay and adjust their basic contribution rate if their pay falls into a new tier
- Added a report that can be printed after payroll is calculated that will list employees with a contribution rate change
NHS Pension Scheme Tiers – England & Wales
| Tier | Pensionable pay used to determine the contribution rate | Contribution Rate |
| 1 | £0.00 to £13259.99 | 5.20% |
| 2 | £13260.00 to £27797.99 | 6.50% |
| 3 | £27798.00 to £33868.99 | 8.30% |
| 4 | £33869.00 to £50845.99 | 9.80% |
| 5 | £50846.00 to £65190.00 | 10.70% |
| 6 | £65191.00 and above | 12.50% |
To view the NHS Pension Scheme tiers and rates in use, go to Employees | NHS Pension | NHS Pension Rates
Setting the Contribution Rate
When your current pay period is finalised, the software will automatically assign each Employee’s Basic Contribution Rate, based on the updated NHS Pension Scheme thresholds.
The contribution rate is determined as follows:
- Full previous year’s pensionable earnings: If the employee has a complete previous years’ pensionable earnings, the rate will be based on those earnings
- Partial or no previous year’s pensionable earnings: If the employee does not have a full previous year’s pensionable earnings (including cases where the earnings were zero), the system will use the current year’s monthly salary, annualized.
It is essential to carefully review each employee’s contribution rate, especially in cases where the system may not assign the rate accurately. This includes:
- Employees with Salary Changes in the Current Year: The contribution rate should reflect the most recent salary change. However, the system may instead base the rate on the previous year’s pensionable earnings.
If needed, you can manually update the contribution rate by navigating to
Employees | NHS Pension
Backdated Arrears
If an employee’s contribution rate changes due to the updated NHS Pension tiered thresholds, the new rate applies retrospectively from 1 April 2025.
However, the system does not automatically recalculate past contributions or generate any backdated arrears.
To ensure accurate contributions, you’ll need to manually calculate the arrears and apply them as either a payment or deduction, depending on whether the employee has underpaid or overpaid. This should be processed in the next available payroll run.
Steps to Calculate and Apply Backdated Arrears:
- Calculate Total Pensionable Pay (from April 2025 to current month):
Refer to the SD55 form. Use the Pensionable Pay | Employee values found in the ‘Table summarising monthly payments’ - Calculate the New Year-to-Date (YTD) Contribution:
Multiply the total pensionable pay by the new contribution rate.
⚠️ If the employee already had a contribution rate change earlier this year, ensure you’re applying the appropriate rates to each period—before and after the previous change.
- Retrieve the Original YTD Employee Contributions:
Use the Basic Employee Contribution column from the SD55 form to find the original total contributions. - Calculate the Arrears:
Subtract the original contribution total from the new total:- A positive result means the employee has overpaid (you’ll need to refund this amount).
- A negative result means the employee has underpaid (you’ll need to reclaim this amount).
- Apply the Arrears in Payroll:
In the employee’s payslip:
- Select ‘New Item’ under the Payments or Deductions section (depending on whether it’s a refund or reclaim).
- Choose: Adjustment | Pension | NHS Pension Contr. Prior Period
- Enter the arrears amount.
This adjustment will be visible on the payslip and will also be included in NHS Pension reporting (e.g. SD55, GP1 reports).