Preparing for the end of the tax year is not quite the headache it once was, but there are still plenty of additional activities for HR and payroll departments to complete during this period – the worst thing being we don’t get a new year celebration at the end of it! Read on for our HR and payroll advice for preparing for the tax year-end.
There are some practical steps to take ahead of year-end to ensure that during the busiest periods there aren’t too many tasks outstanding. As payroll consultants, we can support your business, but in the meantime, consult the below to-do list so that you can get ahead:
1. Create your payroll calendars for the year ahead and get these agreed with HR and Finance.
2. Ensure you know when your systems will have the latest patches/upgrades applied to include the new tax year information and ensure you have adequate time to test.
3. Ensure you have any year-end adjustments on hand and have made calculations (where you can do these in advance).
4. Prepare for the additional print runs associated with P60s and dig out those FAQs to prepare for the onslaught of queries about how the P60 figures don’t match what the employee has been paid.
Don’t forget, if you are in need of an expert payroll service, we at Phase 3 are here to help.
The first thing to identify is ‘when is the tax year-end and how does it fall?’ This is particularly important for those organisations operating a weekly payroll as there could be a week 53 depending on when the payment date falls.
The tax year-end process does not vary too much from a usual monthly process for payroll. Once the payrolls have been calculated and the FPS and EPS submitted for all payrolls, the additional activities are more usually focused on enhanced checking of the following:
• Tax and Taxable Pay – do these balance and have the correct liabilities been reported to HMRC?
• NI Categories – have these been checked regularly and are all employees on the correct letter at the end of the year?
• NI and NIable Pay – do these match and are all of the levels of NI in balance? This is a common issue with payroll software when retrospective adjustments have been applied to employee records.
Once you have completed your enhanced checks, any errors will need to be reported on the year-end FPS. Most software suppliers will have a document outlining exactly how to do this process. This ensures any corrections to employee tax records are applied in the payroll but also with HMRC.
Top tip: Remember for any tax year-end adjustments to create a costing file for your finance team and to ensure any payments or refunds due from HMRC are processed.
Once all corrections have been submitted and reconciled, produce those P60s. Again, this is usually an automated process in HR/payroll software but might be a process you need to run in the system. This should release P60s to self-service users or allow you to email/print P60s – remember this must be done before the 31st May.
Another top tip is to ensure that all submissions have been accepted by HMRC and that there are no outstanding liabilities or fines on the accounts to be paid.
When rolling payrolls forwards into the new tax year, most payroll systems will automatically process the P9 and P9x process to uplift tax codes and move week 1 and month 1 codes to cumulative and increase by the relevant number of points. A quick check of this is always worthwhile, however.
The new tax year means new rates and thresholds to get to grips with.
Once the new tax year information has been confirmed, Phase 3 will release our handy guide for payrollers including all relevant rates and thresholds.
If you need support with payroll year-end or any further help from a HR technology consultant, please get in touch.
For more tips and advice, make sure to head to our Insights page.