As the daffodils, blossom and lighter mornings indicate that spring is on its way, those in the payroll world are also reminded that the end of the financial year looms. Follow RSM’s payroll year-end (PYE) guide, provided by our payroll experts to ensure that you’ll breeze through to summer.
What employers need to do
- Final Submission - either the final Full Payment Submission (FPS) or final Employer Payment Summary (EPS) submission must be marked with the final submission of the year indicator to confirm to HMRC to close that tax year. If changes are made after this, employers must include another final indicator. Monthly penalties may apply if you do not send the right number of FPS/EPS forms, or if they’re late.
- Cleardown - employers may need to remember to cleardown all the Year to Date (YTD) balances from the previous tax year, RSM’s payroll software Pay Manager (formerly known as InPay) does this automatically.
- Week 53 - employers who are running a weekly payroll and are due to pay employees on the tax year end date of 5 April 2020 may need to prepare for a week 53 payroll run, this is because 2020 is a leap year.
- Missed leavers - employers must process any leavers ahead of their payroll year-end submission. This relates to anyone who’s left the business since the last payroll year-end date.
When employers need to do it
- 5 April - the 2019/20 tax year ends on this date.
- 6 April - the new 2020/21 tax year begins.
- From 6 April - update employee payroll records and update payroll software to the new year.
- 19 April - deadline for the final submission of the 2019/20 tax year. From 20 April 2020, the Earlier Year Update (EYU) will no longer be a valid submission to make amendments to the tax year ending 5 April 2020 and any amendments will need to be made using an in-year FPS.
- By 31 May - all employees who are still working for the organisation on 5 April 2020 need to receive a P60.
- By 6 July - P11d deadline. Employers need to report employee expenses and benefits to HMRC, if not processed through payroll, and provide P11d forms to employees.
- By 22 July - pay Class 1A National Insurance contributions (NIC) on P11D benefits.
Small Employer Relief – any employer with a NIC bill of less than £46,350 at the end of the 19/20 Tax Year, qualifies for Small Employer Relief. This means that for statutory payments such as SMP, qualifying employers can reclaim 103 per cent rather than 92 per cent from HMRC. Qualifying employers will need to ensure this is set in their payroll software at the start of the Tax Year.
Employment Allowance –from April 2020 new eligibility rules mean only companies with a NIC bill of less than £100k and not receiving state aid above de minimis limits will be eligible for claiming the employment allowance. For more information refer to our recent article Employment allowance – what’s new for April 2020?
Apprenticeship Levy – employers should review at the start of the tax year whether they believe their paybill (NICable pay) will exceed £3m, or are linked to any group of companies that collectively may have a paybill of £3m and apply the Apprenticeship Levy flag in their payroll software if so.
IR35 – the new IR35 rules come into place from April 2020. Employers will need to assess whether any of their contractors fall within the scope of IR35 and set them up on their payroll if they do. For more information and guidance please refer to our IR35 hub.
Tax Code Uplifts – unless there are changes announced in the March 2020 budget, there are no changes to personal allowances in the new Tax Year. Therefore, there is no requirement to uplift L, M and N suffixed codes. Any new tax codes for the new Tax Year will be provided by P9s ready to import and process in the first payroll of the new Tax Year.
For more information or to get more help from RSM’s outsourced payroll experts, please contact Simon Balaam.