The payroll year-end checklist: What your business needs to know
There is still time for you to get your payroll requirements sorted before payroll year end. The steps to follow are listed below.
How long is the HMRC deadline for payroll year end?
The date is April 19.
You should ideally just be dealing with a month-12 or week-52 payroll with a few extra steps to close the year when sorting your processes.
Knowing what needs to be done right is essential.
The purpose of this article is to help you prepare for payroll year-end.
1: Check when your payroll ends
Some payrolls may not end on week 52, so an additional payroll may be needed. As a result, your payroll will end on week 53, or perhaps 54, or 56.
Two things must be true for this to happen:
Payroll is processed weekly, two-weekly, or four-weekly (monthly payrolls are excluded).
Your usual payroll date is 5 April (or 4 April if it's a leap year—2024, 2028, and so on).
It is important to note that payrolls that run monthly always have only 12 months. Due to this, there will never be a month 13, so you can skip this section and go right ahead with payroll.
You can skip ahead if your payroll is run after 5 April.
Depending on whether you pay weekly, twice-weekly, or four-weekly, your payroll ends on 5 April as follows:
Weekly payroll falling on 5 April: A week 53 payroll (5 April to 11 April)
Two-weekly payroll falling on 5 April: A week 54 payroll (5 April to 18 April)
Four-weekly payroll falling on 5 April: A week 56 payroll (5 April to 2 May)
For the extra payroll, you need to switch employees to a week one tax code.
You should check your payroll software to see if it does this automatically. The tax code status must be amended to a week-one basis, or employees will pay too much tax.
In Step 6, you will see how to adjust the tax code for the new payroll year based on the P9X (see below).
2: Identify leavers or new hires
You should check to see if employees who left your business last year have been processed, or if anyone new has come on board.
Communicate clearly with managers and ensure there is an open line of communication.
It is a time of year when everyone should be included.
Do this before submitting your final Full Payment Submission (FPS) or Employer Payment Summary (EPS).
It's not always easy to fix details like this once you start a new payroll year.
3: Complete your final payroll
Before you can run your year end for 2023/24, you must complete your final pay run.
Assuming you have a week 53 (or 54/56), processed the final payroll of the tax year, and made any relevant leavers for your employees. You can now send your final FPS and, if necessary, EPS.
It is due on 19 April.
A P32 payment must also be recorded with HMRC.
In the final pay period, there is no difference between FPS and EPS. You can then proceed with payroll year end by submitting them as usual.
It is crucial to avoid errors that require retrospective adjustments. Any adjustments required after 19 April will require additional FPSs or EPSs.
In the past, retrospective adjustments were carried out through an Earlier Year Update (EYU), but this is no longer done.
There is an unwritten rule among payroll professionals that we will do everything we can to avoid having to make retrospective adjustments after the tax year ends.
4: Conduct your year-end process
You can submit your final EPS to HMRC with the help of your payroll software at the end of the tax year.
EPS submissions are typically sent to HMRC either monthly or quarterly, but this final submission is different.
EPS submissions include end-of-year declarations. This will include the date your business ceased operations, if applicable.
You can now process your year end and make your final tax submission for 2023/24.
After completing this step, you can produce your P60s.
5: Prepare the P60s
By 31 May, you must send a P60 to all your employees who worked on 5 April, the last day of the tax year.
Due to the Intermediaries Legislation (IR35), deemed employees are now on your payroll.
It summarizes their pay and deductions for the year, and is perhaps the last task to complete after the end of the year.
Payroll software allows you to generate P60s and securely share them online with your employees, much like you share payslips.
If necessary, you can print them off.
The P60 creation should not be run before the final payslip has been issued, plus the necessary time for employee feedback about any errors.
6: Make sure the P9X is up to date and start your new payroll year
Many payroll professionals consider two processes to be one. A tax year is coming to an end and a new one is beginning.
New year's checklists are much longer than year-end checklists.
It is therefore necessary to refer to the P9X right after you close off and before you start the month one payroll (or week one payroll).
As of 6 April, employers are required to carry forward or change their tax codes according to the P9X document published by HMRC.
Another place to look for this information before the first pay run of the year is in the software vendor's support documentation.
The government's web pages are the primary source of information, however.
As part of the new payroll year, we will also be checking student loan and postgraduate loan thresholds.
Payroll must manually do some things:
In the case of deferred National Insurance, CA2700 certificates are only valid for one tax year, so new certificates must be obtained before paying for the new tax year using the deferred National Insurance contributions (NICs) insurance category letter.
Those receiving childcare vouchers should be reviewed to ensure that the value they are entitled to is not needed to be amended. Every time you receive childcare vouchers after 6 April 2011, HMRC requires you to complete a Basic Earnings Assessment (BEA) as part of your PAYE process.
Dates to keep in mind for payroll year-ends
Here are a few of the key dates that you need to be aware of around payroll year end, along with a few other payroll dates.
Adding these to your calendar is a good idea if you haven't already:
5 April
The 2023/24 tax year ends on this date.
Before 6 April
Update your employee payroll records.
Time to update your payroll software.
6 April
The new tax year (2024/25) begins.
19 April
This is the deadline for the final submission of the 2023/24 tax year.
22 April
This is the deadline for month 12 PAYE.
By 31 May
Your employees need to receive their P60s by this date.
By 6 July
You need to report on expenses and benefits; you may be able to use your payroll software to do this.
6 July
This is the deadline to submit your P11D and P11D(b) forms.
22 July
On this date, payment of class 1A National Insurance contributions on Benefits in Kind must be with HMRC (note that 19 July is the deadline if not using digital systems).
A final thought about payroll year-end
There is no need for payroll year end to be stressful.
Preparing for the new tax year can be made easier with a bit of forward planning. For support reach out to Zyla Accountants today.