Payroll year end is fast approaching again and to ensure you have a smooth and efficient payroll year end we have put together a few tips to make sure your business is prepared.
Running payroll throughout the year can be enough of a challenge without the added requirements of the payroll year end. Not to mention all of the legislative changes in place for 2019, such as minimum contributions for auto enrolment pension schemes increasing in April and the National Minimum and Living Wage increasing.
So where do you start?
Every year, after your last pay run, but before 19 April, you need to send a final payment submission to HMRC, either using a Full Payment Submission (FPS) or Employer Payment Summary (EPS). Finally, after prepping for the new year and by the end of May all employees will need to be issued a P60.
Let’s start by outlining some of the key dates you need to put in your diary:
The key payroll year end dates for 2018/2019:
- Before 6 April 2019 – On or before your employee’s payday send final Full Payment Submission (FPS) payroll report for the year to HMRC
- 5 April 2019 – Deadline for registration for 2019/20 payrolling of benefits
- 6 April 2019 – Start of the 2019/2020 tax year
- From 6 April – Update employee payroll records
- From 6 April – Ensure payroll software is updated
- 19 April – Deadline for the final employer payment submission and amended 2018/19 full payment submissions.
- By 31 May 2019 – Deadline for supplying current employees a P60
- By 6 July 2019 – Report employee expenses and benefits using P11D and/or P11D(b)
- By 22 July – Pay Class 1A NIC on P11D benefits (19 July if by post)
Then you need to consider a couple of oddities in the payroll year end
- Do you have a week 53?
If your employees are paid monthly, you won’t have a week 53 and can process your payroll as normal. Nor will those that pay weekly, fortnightly or four-weekly and the normal pay date doesn’t fall on 5 April.
However, if your weekly pay day does fall on Friday 5 April then you have a week 53. If this is the case, you will need to ensure you complete your payroll for 5 April before processing your year end.
- Do you need to send an Employer Payment Summary (EPS)?
Every time you pay your employees you notify HMRC by sending an FPS. If you don’t have any active employees on your payroll for that period then you still need to notify HMRC, but this is done with an EPS.
The only other times you’ll need an EPS is if you need to pay or recover an apprenticeship levy, you are making statutory payment recoveries (92% or 103%), have started claiming employment allowance in that period, or are recovering any CIS suffered.
Can you claim small employer’s relief?
When it comes to payroll year end you should consider whether you can claim small employer’s relief. If your business has a liability for National Insurance Contributions lower than £45,000 in the last tax year then you qualify as a small employer. By falling into this bracket, you will be able to reclaim 103% of any statutory maternity pay, statutory paternity pay, statutory adoption pay and shared parental pay under small employer’s relief.
You’ll be able to calculate how much you can get back using your payroll software. To reclaim the reliefs you just need to include them in an Employer Payment Summary (EPS) which is issued to HMRC.
Missed the deadline?
If you’ve made a mistake or missed the 5 April deadline then don’t worry, you can submit a new correct form by 19 April. However, after the 19 April you will not be able to file an FPS for the previous year. In this instance you will need to use an Earlier Year Update (EYU) showing the difference between the last reported final figure and the correct final figure for the tax year.
Do be aware that by sending an EYU after the 19 April you may run the risk of penalties for late submissions.
Preparing your P60s
A P60 is an important document that summarises an employee’s pay and deductions for the tax year. You will need to give P60s to all employees whether you are an online or a paper filer. It is needed as proof of income for loans and mortgages, claiming overpaid tax or applying for tax credits.
The P60 will need to be provided to each employee that is actively working with you on the 5 April by 31 May. They are not required for those employees who have left prior to 5 April as they receive a P45 upon leaving.
Should you miss the deadline of providing employees their P60 then you may be subject to a penalty fine of up to £300 per late form and an additional charge of £60 per day for each day the failure continues.
Reporting employee expenses and benefits
If you have provided your employees with benefits or expenses throughout the year then you’ll need to report these by 6 July.
You will also need to send a P11D(b) form showing the amount of Class 1A NICs due from all P11D forms and any benefit processed through payroll. You must pay Class 1A National Insurance by 22 July each year for the previous tax year.
Still need more help with your payroll?
If you’re struggling managing your payroll internally and need someone to take away the stress with a cost-effective professionally managed solution then you can engage a payroll service provider, who can deal with the entire process and any issues for you.
If this is something that you are looking to do, then it is important to find out how easily their systems will integrate with yours and how easily employees can access their payroll information. Don’t forget to be sure they can also scale up, if need be, with the growth of your business and ask the all-important questions on their cloud security.
Written by James Alesbury MCIPPdip
As Associate Director of HWB Accountants, James specialises in payroll and auto enrolment for the SME market, working closely with clients to ensure compliance.