Why Motor Trade Payroll Isn’t Like Standard Payroll

A lot of technicians and MOT testers aren’t paid strictly by the clock. There can be various incentives or bonus structures built around what they get done rather than just the hours they’re in. That works well for the business, but it creates a compliance risk that a standard payroll process won’t catch.

Flat-Rate Pay and the National Minimum Wage

Everyone is legally entitled to at least the National Minimum Wage for every hour they work. If their total pay, divided by the hours they worked, comes out below minimum wage in any pay period, HMRC can order you to backdate their pay and add penalties on top, no matter how generous the flat rate looked on paper or the bonus was last month.

The important thing is to keep an accurate record of the hours they actually work and check their pay against the minimum wage in each pay period. That’s particularly important where bonuses or job rates make up a significant part of their earnings, as a quieter month could leave their hourly rate lower than you expect.

The Apprenticeship Levy Is Changing

Since 1 April 2026, the Apprenticeship Levy has had a new name: the Growth and Skills Levy. The 0.5% charge on pay bills above £3 million hasn’t moved, and most independent motor trade businesses sit comfortably under that, so this was never really a levy that applied to you.

What has changed, and what’s about to change further, is the funding available if you’re below that threshold. From 1 October 2026, you’ll be able to access 100% government-funded apprenticeship training for new starters under 25, with no contribution required from you. Businesses that don’t pay the levy and take on a new apprentice aged 16 to 24 may also be eligible for a £2,000 hiring payment, with further support available in some circumstances. If you’ve been putting off taking on a trainee technician, that’s a real drop in what it’ll cost you, right when the trade needs more of them coming through.

Don’t Forget Pension Contributions on Bonus and Overtime Pay

Workplace pension contributions can include more than just basic salary. Depending on how your scheme is set up, bonus and overtime pay may need to be included too. If your payroll’s only set up around basic pay, you could be unwittingly under contributing for technicians whose earnings lean heavily on bonus and overtime, which is exactly how a lot of pay works in this trade.

How We Can Help

We can check that how you pay won’t land you with a minimum wage bill you didn’t see coming, as well as help you make the most of apprenticeship funding, so training your next technician costs you less. We’ll also give you peace of mind that pensions are worked out correctly, even when pay changes month to month.

We can also handle the whole payroll for you, including PAYE, National Insurance and reporting, giving you one less admin headache and more time in your day.

Speak to a specialist motor trade accountant today

We’ve been advising motor trade businesses for over 30 years. To find out how we can take the admin off your plate, call 01603 904131 or email enquire@themotortradeaccountants.co.uk

Want more practical, jargon-free advice? Grab a free copy of our brochure, ‘5 Expensive Mistakes that Could Put the Brakes on Your Motor Trade Business’.