Year End Procedures for your Payroll

We here at ER Grove know that payroll can be quite complex with lots of things to remember and constant changes. That’s why we’ve put together some of the important information so that you completely understand the end of year procedures and make sure your payroll is administered seamlessly and smoothly.

 

• The final EPS for the tax year informs HMRC that you are satisfied all year to date values have been successfully recorded and transmitted to HMRC, and that this will be the final submission they will receive for the tax year. All PAYE schemes must submit a final end of year submission, allowing the tax year to be closed off and enter the new tax year. For example, if your account is in credit due to recovering statutory amounts or CIS, a final submission is required in order to begin your reclaim.

 

• The deadline for distributing P60’s is 31 May 2018. P60’s can be produced via templates contained within payroll software or ordered from HMRC. All staff still employed with the company at 5 April 2018 are to receive a P60.

 

• If it comes to light an error has been processed after the year end deadline 19 April 2018 has passed, this can be corrected via an Earlier Year Update (EYU) submission. The payroll provider will have set guidance on how to action this. Alternatively, if this function is not offered, HMRC’s Basic PAYE Tools software can be used.

 

Commencing 2018/19 Tax Year

The new tax year began on 6 April 2018 and it is the employer’s duty to ensure the payroll is set up correctly before running the first payroll. The payroll software must be updated to reflect the new thresholds for Tax and National Insurance. This also affects student loan repayments and calculating deductions.

 

HMRC will have issued P9 tax code notifications against employees where there is a difference in their code. All other members of staff will be adjusted according to the rules set out by the government. The personal allowance for the new tax year is £11850, giving a tax code 1185L. For those employee’s without a P9 instruction, all tax codes are to be adjusted by a set amount to reflect the increase of the personal allowance. Please see the table below for the increments set out for 2018/19.

 

Tax Code Suffix	Increase Value	Example
L	35	1150L becomes 1185L
M (receiving Marriage Allowance)	39	1265M becomes 1304M
N (Transferred Marriage Allowance)	31	1035N becomes 1066N
BR, D0, D1, NT	–	Remain unchanged until HMRC notify otherwise

 

Before commencing your first payroll run, you should check that all employees are receiving at least the minimum wage/living wage depending upon their age bracket. In addition, if your company is within Auto Enrolment, check with your pension provider as to what contributions you should be deducting from within the payroll for both employer and employee amounts as we enter the different phases. Changes within contribution levels are to be communicated to your staff either by the pension provider or the company. Please view the tables below for the current wage rates and contributions.

 

Employee personal allowance	£228 per week £988 per month £11850 per year
UK Basic tax rate	20% on annual earnings above the PAYE tax threshold and up to £34500
UK Higher tax rate	40% on annual earnings from £34501 to £150000
UK Additional tax rate	45% on annual earnings above £150000
Basic standard tax code	1185L

 

Remember to check that you are claiming the £3000 employment allowance if you are eligible. If you have not claimed for previous years you can make a claim for the Employment Allowance up to 4 years after the end of the tax year in which the allowance applies. For example, if you want to make a claim for the allowance for the tax year 2015 to 2016 (that tax year ends on the 5 April 2016), you must make your claim by no later than the 5 April 2020. You will need a separate EPS for each year’s claim when claiming for any tax years that have now ended. You don’t need to send previously reported EPS figures, such as statutory payments.

 

Class 1 National Insurance thresholds

 

LEL	£116 per week £503 per month £6032 per year
Primary Threshold (PT)	£162 per week £702 per month £8424 per year
Secondary Threshold (ST)	£162 per week £702 per month £8424 per year
Upper Secondary Threshold (under 21) (UST)	£892 per week £3863 per month £46350 per year
Apprentice Upper Secondary Threshold (apprentice under 25)	£892 per week £3863 per month £46350 per year
Upper Earnings Limit	£892 per week £3863 per week £46350 per year
Employment Allowance (per employer)	£3000 per year

 

P11D Forms

Employers who provided taxable expenses and benefits to employee’s during 2017/18 need to report these to HMRC by 6 July 2018 via P11D form. If these have already been payrolled, these are not to be included again. There are some changes to the P11D this year to reflect the new valuation rules introduced 6 April 2017 for benefits and expenses provided under an optional remuneration arrangement. Employer’s are also required to complete form P11D(b) which is a declaration confirming you as the employer have not only submitted all P11D’s needed but also the Class 1A National Insurance return. The deadline for this is also 6 July 2018. Note P11d(b) forms are still needed even if all benefits have been payrolled and these need to be dealt with when calculating the Class 1A liability. Employees are to receive a copy of their P11D by 6 July 2018 and any Class 1A National Insurance is to be paid by 22 July 2018 if paid electronically.

 

If you do wish to discuss any of the information above or any payroll related issues, then please do not hesitate to contact us and we will do all we can to help.