KCNews asked local accounting firm Kindred Accounting Ltd (t/a KindredCo), Chartered Accountants – Kāpiti Coast to provide an update on What 2026 Cost Changes Mean for Kāpiti Businesses.
If you’re a small business employer, you’re probably feeling it already: payroll just seems to cost more every year — even when nothing major has changed in your team.
You’re not imagining it.
From April 2026, several cost increases all land at once. On their own, none are dramatic. Put together, they create a noticeable jump in the real cost of employing people — especially for small businesses on the Kāpiti Coast.
As accountants and tax advisers working closely with local employers, we wanted to break down what’s changing, what it means in real life, and where a good payroll setup can actually make things easier (not harder).
First up: wages have gone up again
From 1 April 2026, the adult minimum wage increased to $23.95 an hour, and the starting‑out and training wage is now $19.16 an hour.
For businesses with staff on or near minimum wage, this doesn’t just affect those employees. It flows through into:
- holiday pay
- sick leave
- KiwiSaver
- ACC
It also raises the awkward question of pay relativity — if your newest team member’s wage goes up, what about the person who’s been with you for years?
To be clear, higher wages are a good thing. They help people keep up with rising living costs and can improve retention. But for small businesses — especially in hospitality, retail, childcare and trades — the cost pressure is very real.
ACC levies: not obvious, but they add up
ACC levies have increased from April as part of the latest three‑year levy cycle.
Employees will see a small dip in their take‑home pay. Employers will see higher work levies, depending on industry.
This is one of those costs that often flies under the radar until something goes wrong — a misclassification, an outdated payroll setting, or a correction notice from ACC or IRD. We see these issues regularly, and they’re almost always accidental rather than careless.
KiwiSaver: higher contributions, less help from the government
KiwiSaver changes are some of the biggest — and most confusing — shifts coming through.
Here’s the short version:
- From 1 April 2026, minimum employee and employer contributions rise from 3% to 3.5%
- From 1 July 2025, the government contribution is halved
- 16–17‑year‑olds now qualify for employer KiwiSaver contributions if they’re contributing themselves
For employers, that means higher ongoing payroll costs. For employees, it can feel like a mixed bag — they’re saving more, but getting less support from the government than before.
It’s a meaningful change, especially for businesses that employ younger staff or run on tight margins.
And yes — payroll software costs have gone up too
On top of the statutory changes, many businesses are also dealing with subscription increases from payroll and accounting platforms. Xero’s pricing changes over the past year have been a big one, particularly where payroll is charged per employee.
We hear the frustration: “Everything’s going up at once.”
But here’s the flip side.
Is paying for a proper payroll system worth it?
Short answer: usually, yes — but the right one matters.
The good bits
A solid payroll system can:
- automatically handle PAYE, ACC and KiwiSaver changes
- file with IRD every payday
- reduce the risk of costly errors
- save hours of admin time
Platforms like Smartly, iPayroll, Thankyou Payroll and Xero Payroll all work well in different situations.
Dedicated payroll systems (like Smartly or iPayroll) are built specifically for NZ rules and often automate payments and filings end‑to‑end. Xero Payroll integrates nicely with accounting but can involve more manual steps depending on the plan.
The downsides
- Subscription and per‑employee costs can sting
- Setup needs to be done properly
- Not every system suits every business
That said, we see far more businesses lose money through payroll mistakes, missed filings, or non‑compliance than through paying for the right software.
What we’re recommending to local employers
The real challenge isn’t any single change — it’s the stacking effect.
Our practical advice:
- Review employment cost forecasts, not just hourly rates
- Check payroll systems are updated
- Reassess software plans—some businesses are over‑ or under‑subscribed
- Get advice early, especially if employing young or minimum‑wage staff
- Look at opportunities for improvements in processes and efficiencies to offset rising costs.
A bit of planning now can prevent some nasty surprises later.
Final thought
None of these changes are designed to trip businesses up — but small employers feel them first and feel them hardest.
With the right systems, good advice, and a clear picture of what’s coming, it is possible to stay compliant without payroll becoming a constant headache.
At KindredCo, we work with Kāpiti Coast businesses every day to help make sense of changes like these — in plain English, and before they turn into problems.
For more see: www.kindredaccounting.co.nz