February 16, 2021

Preparing for Payroll Year End: A Checklist

Are you a payroll professional? Remind yourself how to prepare for payroll year end in this article.

The article below is a transcript of a video we created on this topic, which you can watch here.

Sending Your Final Full Payment Submission (FPS)

You can use your payroll software to send a Full Payment Submission (FPS) to tell HM Revenue and Customs (HMRC) about payments to your employees and what deductions you’ve made.

The actions you will want to take around this are as follows:

  • Send your final Full Payment Submission (FPS) on or before your employees’ last payday of the tax year
  • Put ‘Yes’ in the ‘final submission for year’ field in your payroll software
  • Include the end of year information on the last report you submit for that PAYE scheme
  • Include in your payroll all employees you pay in the tax year, no matter how much you pay them
  • Include any employee who has worked for you in the current tax year (since 6 April) even if they’ve left your business

The deadline for this process is the last pay day before the 5th April.

Please note, if you run more than one payroll under the same PAYE scheme reference (for example for employees you pay weekly and monthly), you’ll need to include the end-of-year information in your last report.

Sending an Employer Payment Summary (EPS)

You should send your final report in an EPS instead of a FPS if any of the following apply:

  • You forgot to put ‘Yes’ in the ‘Final submission for year’ field in your last FPS
  • Your software does not have a ‘Final Submission for year’ field on the FPS
  • You did not pay anyone in the final pay period of the tax year
  • You sent your final FPS early, and you did not pay anyone for one or more full tax months in the last tax year

Get Ready for the First Payroll Run

In order to prepare for your first payroll run you’ll want to take the following actions:

  • Prepare a payroll record
  • Identify the correct tax code to use in the new tax year
  • Enter the correct tax code in your payroll software

Tax Codes

Please be aware that HMRC will send you a:

  • P9T form for any employees who need a new tax code
  • P9X form with general changes for employees whose tax code ends in ‘L

The L code usually means an employee is entitled to the standard tax-free Personal Allowance.

If you receive a lot of tax code notices you may want to utilise HMRC’S payee desktop viewer. Using this, you can view, search and sort large numbers of employee tax codes and notices.

Preparing Employee P60s

A P60 summarises total pay and deductions for the year.

  • You’ll want to give a P60 to all employees on your payroll who are working for you on the last day of the tax year (5 April)
  • If you’re exempt for completing your payroll online, order your P60s from HMRC
  • If you need to change a P60 give your employee either a: new P60 marked ‘replacement’ – this can be paper or electronic letter confirming the change

The deadline for this process is May 31st.

Reporting Expenses & P11Ds

At the end of the tax year you’ll usually need to submit a P11D form to HMRC for each employee you’ve provided with expenses or benefits.

You can report this using your payroll software, if it has this feature.

Actions you need to take around this are as follows:

  • You’ll need to pay any Class 1A National Insurance due on the taxable expenses and benefits you’ve provided
  • Submit a P11D form to HMRC for each employee you’ve provided with expenses or benefits
  • Payments must be received by 22 July, or 19 July if you’re paying by post
  • The deadline for this report is July 6

Payrolling Guidance Around P11Ds

You can deduct and pay tax on most employee expenses through your payroll (this is called ‘payrolling’) providing you’ve registered with HMRC before the start of the tax year on 6 April.

You don’t need to submit a P11D form for an employee if you’re paying tax on all their benefits through your payroll.

You’ll still need to submit a P11D(b) form so you can pay any Class 1A National Insurance you owe.

P11Db Forms

Your P11D(b) tells HMRC how much Class 1A National Insurance you need to pay on all the expenses and benefits you’ve provided.

You’ll also need to submit a P11D(b) form if:

  • You’ve submitted any P11D forms
  • You’ve paid employees’ expenses or benefits through your payroll
  • HMRC have asked you to

If HMRC have asked you to submit a P11D(b), you can tell them you do not owe Class 1A National Insurance by completing a declaration.

Checking Your Payroll Software is Updated

There are some actions you’ll want to take around this, these include:

  • Follow your provider’s instructions to update your payroll software so it uses the latest rates and thresholds for Income Tax, National Insurance and student loan repayments.
  • Download and install Basic PAYE Tools again if you’re using a version before 14.2.14330.88. The version number displays in the bottom-left corner of the tool.

It should be noted that Versions 14.2.14330.88 and later of Basic PAYE Tools check for updates automatically, for example when the tax year changes or new rules come in.

If you’re a Moorepay Payroll customer, some of the above may be actioned on your behalf. So, if you’ve got any questions it’s best to speak to your payroll specialist who will be happy to help.

If you’re not a customer and you’d like additional support with your payroll, learn more about our software here. You can watch our video on preparing for payroll year end here.

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About the author

Claire Younger

About the author

Claire Younger

With a career in payroll spanning 24 years, Claire is CIPP qualified and has been with Moorepay for 19 years. Claire has enjoyed a wide range of roles in payroll, starting out as as a Trainee Payroll Administrator, and progressing to a Payroll Manager. She's also worked as an Operations Consultant, Offshoring Consultant, Project Manager, Implementation Manager, Partner Enablement Manager, Strategic Account Manager and most recently, a Business Improvement Manager. Claire is passionate about business improvement, client service and working across multiple teams. She often works in a ‘troubleshooting’ role supporting colleagues in operations and implementation with special projects, process improvement and best practice.

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