Getting ready for your first payroll year end? Make sure you don’t forget these vital tasks
Trying to process your payroll year end can seem like a minefield of terminology and forms to tackle, but it doesnt have to be that way. Here’s a breakdown of your to-do list.
For business owners who have made it to the end of their first tax year, mixed emotions can present themselves. Firstly, of course, there is pride at having survived the first year as a startup but also head-scratching confusion when it comes to submitting year-end declarations.
At first glance, it can certainly appear like as if there are reams of forms and rules to adhere to, but once you get stuck in, it really isnt all that bad. What’s more, these days there are all kinds of cloud technologies and software applications to help you get through it, one step at a time.
Here’s an overview of what’s involved.
What is payroll year end?
At the end of the tax year, businesses must submit end-of-year declarations to HMRC. Employees should be issued with a P60, which is a statement for taxpayers summarising the tax paid throughout that year.
The end of the tax year in the UK is 5 April, but employers have until 31 May to issue P60s.
Finish this year’s payrolls
Send final Full Payment Submission (FPS) this is a form that reports to HMRC what payments have been made to employees, and what deductions have been made. The deadline is on or before your employee’s payday.
You can submit this earlier, but don’t get ahead of yourself. It may seem like you’re ticking off chores, but if any information changes after you’ve sent it for example, if someone resigns or changes tax code you will need to send a corrected FPS.
In the next tax month, you will be able to view how much tax and National Insurance is owed via your HMRC online account.
Send the final Employer Payment Summary Reductions can be claimed by sending an Employer Payment Summary (EPS) and then the balance must be paid.
EPS reductions include things like such as paternity or maternity pay, the Apprenticeship Levy, and Employment Allowance. You should also send an EPS instead of an FPS if no employees have been paid in a tax month.
Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.