The Small Business Guide to Payroll Year End

Transcription

1 Payroll The Small Business Guide to Payroll Year End 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. kashflow.com

2 The essential facts Key dates On or before your employees payday Send your final FPS payroll report of the year From 6th April Update employee payroll records From 6th April Ensure your Payroll Software is updated (KashFlow Payroll update is issued in March) By 31st May Give your current employees a P60 By 6th July Report employee expenses and benefits if they aren t being processed through payroll By 22nd July Pay Class 1A NIC on P11D benefits Key duties As an employer running payroll, you need to: 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 Claiming Small Employer Relief If you newly qualify as a small employer (with a liability for National Insurance Contributions that was less than 45,000 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.

3 Make sure you re prepared Make sure you re prepared for a smooth Payroll Year End by following these steps: 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. Top tips 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. h 5t l Apri

4 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.

5 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. 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. 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 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 in case there are any disputes about your submission.

6 Handling employee records Your year-end payroll should include all the employees you ve paid in the tax year, regardless of how much you ve paid them. This is the same as any other period s FPS, and will include both current employees paid that period alongside any leavers made in the same period. For each employee still working for you on 6th April, you ll need to prepare a payroll record. You ll also need to identify their tax code for the coming tax year and enter their tax code into your payroll software. Tax codes If any of your employees need a new tax code, then HM Revenue and Customs will send you a P9T form. They ll also send a P9X form to cover any general changes for employees with a tax code that ends in L. For new employees, you ll just use the information on their P45 to work out their tax code. To learn more about emergency tax codes, visit this page. Updating tax codes From 6th April 2018, the tax codes will increase by the following: L tax codes increase by 35, M tax codes increase by 39 N tax codes increase by 31 e.g. from 1150L to 1185L If you re using KashFlow Payroll, then this will automatically update your tax codes for you.

7 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.

8 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. P9D If your employee has earned less than 8,500 in the tax year, you need to submit a P9D form. P11D If they earn more, or the benefits/expenses were for a company director, you ll need to submit a P11D form. You can learn about those here. 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. Find out more. 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

9 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 EASY 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 Last year 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

10 About KashFlow This guide to payroll year end was brought to you by KashFlow specialists in straightforward payroll software for small businesses across the UK. KashFlow is a UK-based software company that offers easy-to-use Accounting, Payroll and HR software designed specifically for small businesses. Founded in 2005, KashFlow was one of the UK s first accounting SaaS providers, and now has a growing customer base of over 57,000 UK sole traders, micro-businesses and small businesses. From getting paid faster to reducing admin time, KashFlow offers paperless and jargon-free accounting and business solutions to time-strapped owner-operators in every industry. For more information, advice and free demos and software trials visit Take a FREE trial