Payroll year-end can be a stressful time for businesses, but with proper planning and organization, it can be a smooth process. Whether you're running payroll in-house or using external payroll software, staying compliant with HMRC and ensuring accuracy in reporting is key.
Here’s a step-by-step guide to help you navigate payroll year-end successfully.
1. Understand Payroll Year-End Deadlines
In the UK, the payroll year ends on 5th April every year. Here are some key deadlines to keep in mind:
- 5th April – The last day of the tax year.
- 19th April – Deadline for final Full Payment Submission (FPS) and Employer Payment Summary (EPS).
- 31st May – Deadline to provide P60s to employees.
- 6th July – Deadline to report benefits and expenses via P11D and P11D(b).
- 22nd July – Deadline for paying Class 1A National Insurance on benefits.
2. Process Your Final Payroll Correctly
Before running your final payroll of the tax year, ensure:
- All payments and deductions are correct.
- Any outstanding statutory payments (e.g., SMP, SSP) are recorded.
- Employee tax codes are up to date.
- Any leavers during the year have been processed correctly.
Once confirmed, submit your final FPS and, if necessary, an EPS to HMRC.
3. Provide P60s to Employees
A P60 is a summary of an employee’s total pay and deductions for the year. You must provide P60s to all employees who are still working for you as of 5th April. If you’re using payroll software, this is usually automated.
Top Tip: Don't leave it to chance. Check if your payroll software provides an automated P60 mailing function ahead of time.
4. Check Your Payroll Software is Ready for the New Tax Year
Before the new tax year starts, update your payroll software to reflect:
- New tax codes issued by HMRC.
- Updated National Minimum Wage and National Insurance thresholds.
- Changes to pension contribution rates (if applicable).
If you use professional payroll software, these updates are often applied automatically, but it's always best to check.
5. Prepare for P11D Submissions
If you provide benefits such as company cars or medical insurance, you need to submit P11D forms for each employee receiving benefits. Also, file a P11D(b) to report Class 1A National Insurance contributions.
6. Plan for CIS Year-End (If Applicable)
For businesses in the Construction Industry Scheme (CIS), ensure all CIS deductions and reports are submitted correctly. Verify subcontractor payments and deductions before the final monthly return submission.
7. Communicate with Employees
Let employees know about:
- Any changes to their tax codes.
- The availability of their P60s.
- Upcoming changes to payroll, such as salary increases in line with minimum wage updates.
8. Review Payroll for Accuracy and Compliance
Conduct an internal payroll audit to:
- Identify any discrepancies.
- Ensure compliance with HMRC regulations.
- Check that all deductions, benefits, and adjustments are correctly processed.
9. Stay Informed About Payroll Changes
Tax laws and payroll regulations change annually. Keep updated with HMRC announcements and attend webinars or training sessions to stay compliant.
Final Thoughts
By preparing early and following these steps, you can ensure a stress-free payroll year-end. Whether you handle payroll manually or through software, staying on top of deadlines and compliance requirements is key to avoiding penalties and ensuring accuracy.
Need help with your payroll software or integrating year-end processes into your software? We would be happy to provide assistance, feel free to contact us.
