Payroll year end checklist: Here’s what your business needs to do

By Keir Thomas-Bryant

Keir is an industry expert in issues impacting small businesses and accountants who cares passionately about the issues and struggles facing the small business and accountant communities around the world, with an additional interest in compliance issues such as the digitisation of tax, data protection and Brexit. 

Payroll year end is just around the corner.

But when is the HMRC deadline for payroll year end, we hear you ask?

It’s 19 April.

Ideally, when sorting your processes, you should be dealing with just a standard month-12 or week-52 payroll with some extra steps added in to close the year.

But it’s important to know what you need to get right.

In this article, we help you get prepped and ready for payroll year end.

Here’s what we cover:

  • Payroll year end things to do
  • Step 1: Check when your payroll ends
  • Step 2: Check for leavers or new starters
  • Step 3: Process your final pay run
  • Step 4: Process your year end
  • Step 5: Get your P60s ready
  • Step 6: Check the P9X and start your new payroll year
  • Payroll year end dates to be aware of
  • Final thoughts on payroll year end

The key thing to remember is that your final reports to HMRC for the 2023/24 tax year must be submitted by no later than 19 April 2024. 

Next, you need to prepare for the new tax year and make sure you provide your employees with their P60s by no later than 31 May 2024.

To help you with payroll year end, here’s everything you need to do, complete with key dates for your diary, so you can tick off what’s required and stay on top of your payroll.

In some circumstances, your payroll might not end on week 52, and instead, you may need to complete an additional payroll. This will mean your payroll ends on week 53, or possibly week 54 or 56.

This happens if two things are true:

  1. You process payrolls weekly, two-weekly, or four-weekly (monthly payrolls are excluded).
  2. Your usual payroll date falls on 5 April in any year (or 4 April if it’s a leap year—2024, 2028, and so on).

Notably, payrolls that run monthly always only ever have 12 months. That means there’s never a month 13, and you can skip this section and run payroll as usual. And if your payroll is run after 5 April then you can skip ahead. If the payroll falls on 5 April, then your payroll ends as follows depending on whether you pay weekly, two-weekly, or four-weekly:

  • Weekly payroll falling on 5 April: A week 53 payroll (5 April to 11 April)
  • Two-weekly payroll falling on 5 April: A week 54 payroll (5 April to 18 April)
  • Four-weekly payroll falling on 5 April: A week 56 payroll (5 April to 2 May)

If you’re affected by this, you need to switch employees to a week one tax code for the extra payroll. Most payroll software will do this automatically, but you should check. If the tax code status is not amended to a week one basis, it would mean most employees will pay too much tax. Once the new payroll year begins you should adjust the tax code again for the new tax year according to the P9X (see Step 6, below).

If employees have left your business during the past year, or there have been new starters, now’s the time to check to ensure they’ve been processed. This might mean talking with managers and making sure clear lines of communication are open.

Julie Northover, a payroll specialist at the Chartered Institute of Payroll Professionals (CIPP) says, 

“Year end is a final sweep to ensure nobody has been missed, it’s a time to make absolutely sure you’ve covered everything. Most people are very disciplined and if they take care of things like this at the end of each pay period then everything should be in order.”

It’s important that you do this before submitting your final Full Payment Submission (FPS) or Employer Payment Summary (EPS).

“Once you move into the new payroll year, it’s not always easy to go back and fix details like this,” she adds.

You need to complete your final pay run of the 2023/24 tax year before you can run your year end. 

So, you’ve worked out whether you have a week 53 (or 54/56), processed the final payroll of the tax year and have made any relevant employees’ leavers. Now you can send your final FPS and, if required, EPS. The deadline for this is 19 April. In addition, you need to record your P32 payment to HMRC.

There’s no difference to the FPS and EPS in the final pay period. Submit them as normal, then you can then proceed with the payroll year end process.

Avoiding errors that require retrospective adjustments is key. Adjustments required after 19 April will involve submitting additional FPSs or EPSs. Before 2020/21, retrospective adjustments were done via an Earlier Year Update (EYU) but this is no longer used.

“There is a process for communicating with HMRC about anything that’s not correct,” says Julie. “But it’s an admin burden that payrollers like to avoid where possible. It’s an unwritten rule among the payroll profession that we will do everything we can to avoid the necessity for retrospective adjustments after the tax year end is complete."

With the help of your payroll software, at the end of the tax year, choose the tax year you want to complete on the Year End screen and submit your final EPS to HMRC. Take note, this final submission is different to those normal EPS submissions you send to HMRC either on a monthly or quarterly basis. Your final EPS submission will include your end of year declarations. If applicable, it will feature the date your business ceased trading.

Now you can process your year end and make your final submission for the 2023/24 tax year. Once this step is complete, you can produce your P60s...

All your employees who are working on the final day of the tax year, on 5 April, need to receive a P60 from you by 31 May. This includes deemed employees who are now on your payroll because of the Intermediaries Legislation (IR35). This important document summarises their pay and deductions for the year, and is perhaps the final task to complete following year end.

Using your payroll software, you can generate your P60s and securely share them online with your employees, usually in the same way you share payslips. There’s also the option to print them off if you need to.

You might be tempted to run the P60 creation as soon as possible, but it certainly shouldn’t be done before the final payslip has been issued, plus the usual time required for feedback from employees about any errors.

“You send payslips out 12 months of the year, if you’re running a monthly payroll,” adds Julie. "And then once a year you send another document, the P60, which is just summarising those 12 payslips. So, if you’ve not had any pay or reconciliation issues with the 12 payslips, you shouldn’t have an issue with the P60.”

“There are two processes that payroll professionals often see as one,” says Julie. “They are closing one tax year off and opening up the next. The new year checklist is bigger than the year end checklist nowadays. So, as soon as you close off and before you start your month one (or week one) payroll, you need to refer to the P9X.”

The P9X is the document published by HMRC that explains what tax codes employers must change or carry forward on 6 April. Software vendor support documentation also summarises this information, so that could be another port of call before the first pay run of the year. However, the government web pages should be considered the primary source of any information.

Other work for the new payroll year involves checking other thresholds such as for student loans and postgraduate loans.

“These will probably be hard coded into the yearly updates from your software vendor,” says Julie. “But you should not sit on your laurels and assume everything’s correct. You need to check to ensure everything is accurate.”

There are some things that must be done manually by the payroll team:

  • If somebody has deferred National Insurance, their CA2700 certificates are only valid for one tax year so renewed certificates are required before you can process pay for the new tax year using the deferred National Insurance contributions (NICs) insurance category letter.
  • Those receiving childcare vouchers should be reviewed to ensure they do not need an amendment to the value they are eligible to receive. As part of the PAYE process, HMRC requires you to complete a Basic Earnings Assessment (BEA) prior to each first pay period in a new tax year for anyone who has been in receipt of childcare vouchers since 6 April 2011.

Some of the key dates around payroll year end have been highlighted above but here they are again below, along with some other payroll dates that you need to be aware of. It’s worth adding these to your calendar if you haven’t got them in there already:

5 April

  • The 2023/24 tax year ends on this date.

Before 6 April

  • Update your employee payroll records.
  • Time to update your payroll software.

6 April

  • The new tax year (2024/25) begins.

19 April

  • This is the deadline for the final submission of the 2023/24 tax year.

22 April

  • This is the deadline for month 12 PAYE.

By 31 May

  • Your employees need to receive their P60s by this date.

By 6 July

  • You need to report on expenses and benefits; you may be able to use your payroll software to do this.

6 July

  • This is the deadline to submit your P11D and P11D(b) forms.

22 July

  • On this date, payment of class 1A National Insurance contributions on Benefits in Kind must be with HMRC (note that 19 July is the deadline if not using digital systems).

See? Payroll year end doesn’t need to be stressful! 

With a bit of forward planning, you can get your processing done with ease before you put preparations in place for the new tax year.

To find out how to upgrade your ERP to Sage 200 or Microsoft Business Central, call Paradise Computing, on 01604 655900 or request more information on our online contact form.

Meet the Team: Gareth Whyley

26 April 2024

Let's meet Paradise Computing's Project Manager, Gareth Whyley. Gareth has a background in IT consultancy and is a specialist in compliance and project management. He is passionate about helping our clients achieve their goals.

Meet the Team: Rachmann Joubert

12 April 2024

Today, we’re shining the spotlight on Rachmann Joubert, a Sage Support Specialist who has brought his wealth of software development experience to the role to help build solutions for our clients.

Meet the Team: Ashley Curtis

29 March 2024

Today we're getting to know one of Paradise Computing's IT Support Engineers - Ashley Curtis. Ashley plays a vital role in supporting the IT infrastructure of our clients and supports them with his expert IT knowledge.