A 6-step guide to a smooth payroll year-end

How to successfully navigate the payroll year-end

As we approach the end of the tax year, those in charge of payroll across business big and small will be getting ready to round off the business’ year.

One of the tasks you’ll be looking at is payroll year-end, something you definitely don’t want to get wrong! Generally, the core of the payroll year-end process should be very similar to a standard payroll run, but with a few added steps to close off the year.

It’s important to prepare well in advance and know exactly what it is you’re needing to do at each step of the process.

Here, we run through 6 simple steps to help you navigate your payroll year-end process.

Before you start

Before we get stuck in, there are a few key dates that you should keep in mind over the course of the payroll year-end:

5^th April – last day of the tax year
6^th April – new tax codes must be in place for the new tax year
19^th April – deadline for submitting final reports, payment due for M12 Paye and NIC (non-electronic)
22^nd April – payment due for M12 Paye and NIC (digitally)
31^st May – deadline for providing employees with P60s
6^th July – deadline for report on expenses and benefits using P11d software
19^th July – deadline for payment of class 1A National Insurance contributions (non-electronically)
22^nd July – deadline for payment of class 1A National Insurance contributions (digital)

Step 1: Check your company’s payroll year-end date

If you run payroll weekly, fortnightly, or four-weekly rather than monthly, or your usual payroll date would fall on 5^th April in any year (or 4^th April in a leap year), this step is for you. If not, you can skip ahead to step 2.

This year, 5^th April falls on a Tuesday, which is rarely used as a payroll pay out day. As a result, there aren’t many chances of a 53^rd payroll week in this year.

However, if your payroll day does fall on 5^th April this year, you will need to bear the following in mind as payroll ends for weekly, fortnightly, or four-weekly pay patterns:

Weekly payroll: Week 53 payroll (5^th April to 11^th April)
Fortnightly payroll: Week 54 payroll (5^th April to 18^th April)
Four-weekly payroll: Week 56 payroll (5^th April to 2^nd May)

If any of these payroll ends apply to your business, your employees will need to be switched to a week one tax code for your final (extra) payroll period to avoid them over-paying tax. Most payroll software will take care of this for you automatically, but it’s best to check to avoid being caught out.

Once your company’s new payroll year begins, you’ll then need to adjust the tax code again for the new tax year. See Step 6.

Step 2: Check leavers and staters

Now is the time to check that any new starters or leavers within your company have been processed properly.

It’s so important to make sure no one has been missed and that your payroll software has the correct information logged to avoid people paying too much or too little tax; this can be very difficult to rectify at the start of the next payroll year. It’s best to get into the habit of updating these things at the end of each pay period.

Step 3: Send final FPS

Your Full Payment Submission (FPS), and Employer Payment Summary (EPS) if required, now need to be sent off by 19^th April.

Your FPS and EPS will be submitted in the same way as any other month for your final payroll period, but it is key that you triple check it and make sure there are no errors.

Step 4: Process your payroll year-end

Check your payroll software’s processing date – this should be set for 5^th April. You can then process your year and make your final submission to complete your payroll year-end. Simple!

Step 5: Prepare P60s

All employees working on the final day of the tax year (5^th April), need to be provided with a P60 – which summarises their pay and deductions for the year – before 31^st May.

Make sure you wait until the final pay slip has been given to the employee before doing this and allow enough time for employees to come back to you with any errors on their payslips. This will allow you to rectify any issues before issuing the P60, which will otherwise be tricky to amend!

Step 6: Check P9X and start new payroll year

The checklist for opening the new payroll year is often bigger than that for closing the last, so it’s important that you refer to the P9X to make sure you get it right.

The P9X is the document produced by HMRC which tells you what tax code your employees should take when entering the new tax year. For some, the tax code will be the same as last year, for others it may change.

While last year’s tax codes were fairly straightforward, announcements from the Government that the personal allowance and some tax thresholds have been frozen will mean there may be more to navigate than usual for the next few years.

It is unclear at the moment what these changes may (or may not) be, so keep an eye on the P9X for accurate, official guidance.

We hope this guide will help you successfully manage and navigate the end of your payroll year.

If you need any further assistance, or you’re looking to change your accounting software, get in touch via the form below.