Eight steps to making your Payroll Year End easier
Posted on 27th April 2022 at 16:32
It has been a trying time owing to the global pandemic, a time of uncertainty and change for most UK businesses, dealing with lockdowns, disruptions in deliveries, furlough schemes and such. Despite that however, Payroll Year End still comes around and businesses need to be prepared, even for potential complications. These easy steps payroll year end guide for business owners should help the process happen quickly and efficiently.
1. Up to date on documentation
Employees should complete and submit the P60s, which proves how much tax they paid on their salaries, as it summarises pays and deductions for the year. It is needed to claim overpaid tax, to apply for tax credits and as proof of income when applying for a loan or mortgage. This is for all the employees with you on the final day of the tax year, 5th April. You need to ensure they have a P60 by 31st May, which can be generated using your payroll software and shared securely online.
2. Ensuring employee details are in order
Ensure that the payroll software is up to date with the correct employee details. Updating details on a regular basis will help you keep accurate data regarding your employees whenever you login into your payroll software. These details include accurate spelling of employee names with current addresses of each. If you have an online system, give employees access to their own profiles so that they can maintain their details properly.
3. Opening balances
Process your last pay run that should fall at the end of the financial year and ensure that figures related to all your employees are accurate. Your business or personal assets and liabilities that have to entered into your organisations file should accurately represent your true financial position. One of the simpler ways to do this is by entering an opening balance for each of the relevant bank accounts and accounts in your file. By the end of this process, if done correctly, your remaining balance at the bottom of your screen should be ‘0’.
4. Up to date on payment details
Double check that all your payment details are up to date and that your pay run has no omissions or missed details such as charges that happen certain months like bonuses that have been carried over to other months despite being only for a month.
5. Process leavers
If any of your employees have resigned, then you need to process them as leavers. This has to be done before submitting your full payment submission or FPS and employer payment summary or EPS.
6. Payment Submissions
Your final submission should have all the above mentioned pointers taken care of when being prepared, so that you can submit your full payment submission to HMRC with confidence. Once you have submitted your final FPS to HMRC, they will maintain the set figures for the relevant tax year for each employee.
7. Reviewing reports
Once you submit your final documents, the P11 and P60 reports can be reviewed. As mentioned before a P60 should be given to all employees on your payroll on the 5th April by 31st May. The P11 reports are available throughout the year while the P60 reports are available at the end of the tax year. If you make any corrections, it is important that you complete it by 19 April, so they can be included in your RTI filings for year-end.
8. Preparing for the new year
This is the final essential step to take and that is to prepare for the new tax year. Review and update your payroll to meet any changes made to regulations. Some areas worth reviewing are:
Employment allowance, which if eligible then indicate that this will be claimed before you process your first pay run of the tax year. Other areas include the national insurance and tax codes. Further, reset any previous calculation methods to meet the requirements of the of new tax year and carry over all other authorised tax code for review.
Conclusion
If you make a list of key dates and forms, it will make it easier to follow regulations. Limited companies or sole traders may find it easier to outsource this to professionals to ensure correct tax payments and procedures. The task at hand of accounting for wages and taxes you have paid and withheld throughout the year can be daunting, but the above steps will provide you with a clear guideline to follow, so as not to miss any important steps.
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