Whether it’s your first payroll year end as a small business or you’re looking to make this year easier, you’re in the right place.

This guide to payroll year end will walk you through the steps you’ll need to take, and offer some helpful pointers on how to make the confusing world of payroll a little easier.

If you're a KashFlow Payroll user we have you covered for Payroll Year End. We've got a step-by-step video guide on how to run your Payroll Year End along with the latest Payroll legislation updates. Learn more.

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The Small Business Guide to Payroll Year End

Payroll

Report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5th April)

Give your employees a P60

Prepare for the new tax year, which starts on 6th April

The essential facts

Key dates

On or before youremployees’ payday

From 6th April

From 6th April

By 31st May

By 6th July

By 22nd July

Send your final FPS payroll report of the year

Update employee payroll records

Ensure your Payroll Software is updated (KashFlow Payroll update is issued in March)

Give your current employees a P60

Report employee expenses and benefits if they aren’t being processed through payroll

Pay Class 1A NIC on P11D benefits

Key duties

As an employer running payroll, you need to:

Claiming Small Employer Relief

If you newly qualify as a small employer (with a liability for National Insurance Contributions that was less than £46,350 in the last tax year) then you should be able to reclaim some or all of any statutory maternity pay, statutory paternity pay, statutory adoption pay and shared parental pay you obliged to pay.

In KashFlow Payroll, you simply have to tick the Small Employer Relief box and this’ll be handled for you.

Make sure you’re prepared

Make sure you’re prepared for a smooth Payroll Year End by following these steps:

If you run multiple pay cycles (for example paying both weekly and monthly) then remember to update the last pay run for each.

If any of your employees are on holiday over year end, then only process their holiday pay up to 5th April. For anything after this date, process it in week 1 of the new tax year.

Top tips

5th

April

£Check you’ve registered with the Government Gateway and that your account it still active.

Prepare for a week 53. If you run a weekly payroll (including fortnightly or four-weekly) then you may have to complete an extra pay run, called a week 53. This will happen if you’re due to pay employees on the tax year end date,5th April.

Week 53 payment can result in an underpayment of tax, and employees may be given a P800 form explaining this to them. To protect employees’ take home pay, HMRC ask that extra Personal Allowances are figured into final payroll calculations.

If you run a monthly payroll, you won’t have a week 53.

Process any leavers ahead of your Payroll Year End submission. You’ll need to this by entering their last working day into your software. This’ll be for anyone who’s left your business since the last Payroll Year End Date.

Process your final pay run

Submit your final FPS

Complete your final pay run of the tax year. This will involve running your last FPS (Full Payment Submission) of the tax year – which ends on 5th April.

If you pay employees in different pay runs (e.g. weekly and monthly) and under the same PAYE scheme, then you’ll need to include the end-of-year information in your last report.As you submit your final FPS, select “yes” in the “Final submission for year” field in your Payroll software.

Do I need to send an EPS?

You’ll need to send an EPS if you didn’t pay any employees during your final pay period (week/month etc.) of the tax year, or if you submit your final FPS early and didn’t pay anyone for 1 or more full tax months.

You’ll also need to send an Employer Payment Summary (EPS) if you forgot to select “yes” in the “Final submission for year” field.

You may also need to file an EPS if you’re submitting statutory payments or apprenticeship levies.

£Top tips

Double check your employees’ pay to make sure the information you’re sending to HM Revenue and Customs is correct.

If you have any failed or outstanding RTI submissions from the tax year, you’ll be able to find these under the Summary tab.

Don’t forget to send a record of your P32 payment to HMRC too. P32 payment is the money you owe HM Revenue and Customs.

Troubleshooting

I’ve made a mistake on my final FPS

Don’t panic! It’s easy enough to correct your mistake and submit a new, correct, form – providing you do it by the right date.

I’ve missed my deadline

If it’s before 19th April, send an FPS or EPS if necessary.

After the 19th, you’ll have to send an EYU (Earlier Year Update) that gives the difference between your last submitted report and the final figures for the tax year.

You may get a monthly penalty between £100 and £400 if you don’t send the right number of FPS/EPS forms or they’re late.

Top tips

Make sure you back up your data from the previous tax year, and keep a record of both when you backed it up and where you saved it.

If you started using your payroll software part-way through the tax year, then make sure you check year-to-date National Insurance for Directors.

You’ll receive an email from HMRC telling you that your submission was successful. It may take some time to arrive, depending on how busy the Gateway is. It’s important to keep this email in case there are any disputes about your submission.

If 19th April has already passed, send an EYU (Earlier Year Update) showing the difference between the wrong FPS numbers and the correct year-to-date ones. You don’t need to give the year-to-date amounts.

If you’ve included the wrong payment date, send an additional FPS with the correct date by 5th April. Enter ‘0’ in the ‘Pay in this period’ section and give your year-to-date figures.

Issuing a P60

You’ll have to provide each current employee with a P60 by 31st May. The P60 is a summary of the employee’s total pay and deductions for that tax year, and needs to be given to every employee working for you on 5th April.

What’s included in a P60?

The P60 form is your employee’s End of Year Certificate.Employees will need it as proof of income for loans or mortgages, and might also need it for claiming back overpaid tax and applying for any tax credits.

P60s should show the employee’s total earnings from the previous tax year. You can learn more about the different tax forms here.

Things to keep in mind

If an employee has had more than one period of work in a tax year, you’ll only need to prepare a P60 for the period closest to the tax year end.

If you don’t intend to pay any of these employees in the coming tax year, you’ll have to issue them with a P45.

If you need to make any amends to your P60s, you have to tell your employees either in a letter or by giving them a new P60 marked “replacement”.

You can create both P45 and P60 forms in KashFlow Payroll, and these’ll be correctly formatted ahead of your submission. Try it here.

What to do if you’ve given your employees benefits

If you’ve given your employees benefits or expenses in the tax year, you’ll need to complete extra forms and make sure they’re reported by 6th July.

If your employee has earned less than £8,500 in the tax year, you need to submit a P9D form.

If they earn more, or the benefits/expenses were for a company director, you’ll need to submit a P11D form.

Using software

Want to make it easier for yourself? You can payroll Benefits in Kind using KashFlow Payroll, so you won’t need to follow the above process.

Don’t forget your dates

Make sure your expense forms are filed with HM Revenue and Customs by 6th July.If you owe any Class 1A National Insurance, pay it by 22nd July (or by 19th July if you’re paying by post). If you don’t you may have to pay interest on any late submissions.

P9D

P11D

££ £

How KashFlow Payroll can help

KashFlow Payroll offers a streamlined and comprehensive approach to payroll that allows you to manage everything from employee payslips to workplace pensions in one, easy-to-navigate place.

You’re guided through every step

Whether it’s an on-screen warning to check your pension contribution rates or automatic calculations for pension contributions and monthly tax / NIC contributions – KashFlow Payroll handles it all for you.

You get an easier year-end process

The Year-end Restart process automatically takes a copy of your data (this will now be known as Last Year’s Data), removes old data and applies changes for the new tax year – including new tax rates.

There’s quick access to last year’s data

Once you run the Year-end restart, KashFlow Payroll will create a copy of your previous year’s data and save this for you. You can amend employees, take backups, print reports and everything else you need to – and any changes you make are saved for you.

Reduce your admin with automated features

Your can automatically send payslips to employees as soon as they’re ready, and send off RTI submissions when you’re ready. KashFlow Payroll makes payroll easy all year round.

Take a FREE trial

EASY

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Claim your training pack

Ensure a stress-free Payroll Year End with KashFlow

If you already use KashFlow Payroll to run your payroll then we've got just the thing for you. Our KashFlow Payroll Year End training pack offers great value for money and contains all the essential product and legislation training you need to make it smooth as possible.

We have a on-demand video for only £50 containing a step-by-step guide on using KashFlow Payroll to complete your Payroll Year End, and we'll also include 2019/20 Legislation video update on all the latest updates that'll impact your future payroll, Earlier Year Update Video.

On-demand Step-by-step video guide: To help you prepare and process payroll year end.

2019/2020 Legislation update: All the new legislation for the new tax year.

Earlier Year Update Video guide: Making corrections to previous years' payroll is one of the most complex payroll tasks, this video will guide you through the steps.

Making Tax Digital guide: A PDF guide to give you an introduction to HMRC's upcoming tax legislation.

Top tips for HR: A PDF guide to give you an insight into how HR software can help revolutionise your business.

Free Trial of KashFlow HR: Try KashFlow HR for free!