Money Matters

Payroll year end: 8 tips from your small business wizards

Need support with your payroll year end requirements? Two business experts share some magical tips to help you get everything sorted.

Payroll year end is just around the corner – 19 April 2024 is coming fast.

But don’t panic. There’s still time to get everything in order.

We’ve asked experts Perry Timms, the founder and chief energy officer of People and Transformational HR, and small business growth coach and mentor Simon Barry to share their tips and tricks to smoothly get you through payroll year end.

From setting up a practical diary of important dates or working out the best way to plan for the period, there’s a lot you can do to handle this busy time of year.

Here’s what they cover:

1. Get to know your payroll year end dates

There are important dates to remember when it comes to payroll year end, so make sure you know what they are and why they are worth remembering.

Here are some of the most important ones:

  • 5 April: The final day of the tax year.
  • 6 April: The first day of the new tax year. You must have all new tax codes in place.
  • 19 April: The latest date you should submit your final reports to HMRC for the 2023/24 tax year.
  • 31 May: You must have provided employees with P60s no later than this date.
  • 6 July: The date you must have reported on expenses and benefits by using payroll software.
  • 22 July: You must have paid your class 1A National Insurance contributions by this date.

2. Be the master of your payroll data

It’s essential to work out what data you need to process end-of-year payroll properly.

If employees have left your business during the past year or you’ve hired new starters, now is the time to check you’ve processed them.

This might mean talking with managers and making sure you’re having regular conversations.

Payroll year end is a final sweep to make sure you’ve covered everything. If you have been disciplined and taken care of your records, everything should be in order.

Questions you might need to answer for payroll year end include:

  • Do you have any ex-employees?
  • Are all deductions processed in time?
  • Are all benefits outside of payroll included and calculated?

Payroll year end is the perfect time to clarify your data.

If you’re still using spreadsheets, getting a clear view of your payroll data can be troublesome, and it’s easy to make mistakes.

Stay on your toes.

Legacy payroll management software may not be sophisticated enough to prepare and store your digital records either.

HMRC-approved payroll software should make all the correct calculations and keep accurate records, so you’re compliant.

3. Get your FPS and EPS on

You’ve been sending out your Full Payment Submission (FPS) and Employer Payment Summary (EPS) to HMRC as part of your payroll runs throughout the year.

Sending out your last FPS and EPS are critical steps in the payroll year end process, as it’s the last information you’ll send to HMRC before the beginning of the next tax year.

Once you’ve sent your last FPS and EPS to HMRC, they are difficult to change.

So it’s worth ensuring they’re spot on the first time.

There is a process for talking to HMRC about anything that isn’t correct, but it’s an admin burden you can do without.

An unwritten rule among payroll wizards is that you’ll do everything you can to avoid having to change anything after tax year end is complete.

4. Peer into the payroll crystal ball

With payroll, it’s helpful to look ahead to coming legislation changes (where possible).

It would help to make sure any new tax codes or additional bonus calculations are ready to put in place.

HMRC-approved payroll software should be able to update itself on changes, but it’s still worth your payroll team understanding the relevant legislation and why it matters.

To protect your company from costly fines and even legal action, you need to stay informed about employment laws, reporting rules, and changing workforce compliance issues.

Payroll legislation is constantly changing.

You can keep up to date with changes on the government’s website.

Payroll seminars and industry conferences offer excellent opportunities to grow your knowledge, too.

5. Get your payroll people locked and loaded

On top of cloud payroll software, make sure you have enough staff to manage the challenges of payroll year end.

How much time do your payroll people spend on repetitive, manual tasks?

How have you allocated workflow?

Is there any new and potential work that may impact your payroll processing?

Payroll could be the biggest expense you have, and your payroll people may have to work with teams across the business throughout the year.

Having enough skilled payroll wizards on your team may also give you valuable insights, especially regarding regulation concerning areas such as gender pay.

6. Stay connected with people and trends

Engagement surveys and market data can be helpful to give you an idea of what your people value and what you include in your pay calculations for the year ahead.

For example: is there new National Living Wage guidance, or are there any growing trends on benefits that go beyond pay?

You need to keep an eye on complaints and actively ask for feedback from your employees about how you can do things better.

Your employees should understand their compliance responsibilities, such as sticking to your expenses policy or keeping accurate overtime records.

7. Make sure you’ve got the correct payroll information

Make sure you have all the details you need on your people, correct any mistakes, and make changes if you need to. It’s your responsibility to maintain employee records accurately.

For example, are they on the correct tax code?

Have their bonuses been accounted for?

Personal information that affects payroll can change regularly.

But every change, from payment to promotion and from retirement plans to maternity leave, must be processed accurately and run like clockwork.

It can be a massive help to have the correct information stored digitally, so you don’t have to ask staff at the last minute.

8. Use payroll software that works with HMRC

Use cloud-based payroll software that allows you to submit what you need for payroll year end with the most practicality and the highest efficiency, making your life so much easier.

If you want to speed things along, give employees more responsibility by moving towards self-service in your payroll technology.

This makes it much easier to review and approve employee requests as they come in and puts the responsibility on individuals to submit their personal information.

Editor’s note: This article was first published in March 2022 and has been updated for relevance.