Key steps and dates for processing your payroll year end

The 2017/18 payroll year ends on 5 April which means it’s almost time to process your year end, a busy time for any business running a payroll. Before that, another deadline looms: the de-commission of the Government Gateway, which goes offline on 13 February and has been replaced by the HMRC Multi Digital Tax Platform (MDTP).

The introduction of RTI back in 2013 made the process much simpler, but it can still be an understandably daunting task for some. We are with you every step of the way to help things run smoothly, so let’s go through the key steps and dates for your diary.

1: Send your final FPS and EPS by 5 April 2018. You should send your final Full Payment Submission (FPS) on or before your employees’ last payday before the tax year ends on 5 April. If you don’t send your FPS by 5 April 2018 it’ll be classed as a late submission but HMRC will actually accept them until 19 April 2018. After this date they’ll no longer be accepted and you will need to send an Earlier Year Update submission (EYU) instead which highlights the difference between your last submitted report and the final figures for the 2017/18 tax year. If you need to send an Employer Payment Summary (EPS), you should send this by 19 April 2018. If you make submissions after this date you may be charged a penalty of £100 per 50 employees for each month your report is late.

2: Update employee records to transfer payroll into the new tax year as soon as possible. A large but essential task is updating the payroll records for every employee working for you on or after 6 April 2018. You’ll need to prepare a payroll record, identify the correct tax code to use for them in the new tax year and enter it into your payroll software. The tax code increases are as follows for the 2018/19 tax year commencing 6th April 2018:

• Employees with L based tax code: increase by 35 points
• Emergency tax code will be 1185L wk/mnth 1
• HMRC may send you tax code notices for individual employees. If this happens, you should overrule the standard increase values.
• P9T form: HMRC will send you a P9T form highlighting any employees that need a new tax code.
• P9X form: this will contain general changes for any employees whose tax code ends in L.

For new employees, use the information provided on their P45 from their previous employer as appropriate.

For employees who pay the Scottish rate of Income Tax, make sure they are set up as being a Scottish taxpayer.

3: Update your payroll software as soon as possible. It’s important to update your software so you’re using the new rates and thresholds for the new tax year on 6 April 2018. For Opera 3 the updated software also includes a new Employee Age List that can assist with managing the National Minimum and Living Wage by helping you identify individuals that are moving from one minimum wage band to another based on their age. 

4: Give your employees a P60 by 31 May 2018A P60 outlines everything you have paid your employees throughout the tax year, along with any deductions, and should be given to every employee by 31 May 2018.

5: Report expenses and benefits by 6 July 2018If you’ve paid employees any expenses through your payroll, you’ll need to tell HMRC about these via a P11D submission. The P11D will show HMRC how much Class 1A National Insurance you owe. This must be paid by 22 July 2018. Take a look at the Pegasus P11D Organiser for help with this.

The Student Loan Thresholds rise from 6 April 2018. Plan 1 increase £555 to £18,330 and Plan 2 rises by £4,000 to £25,000.

Workplace Pensions Reform started in October 2012. The minimum contribution rates were set at 2%, usually split equally between the employer and employee with both contributing 1% each. From 6 April 2018, the total minimum contribution must be 5%, usually with the employer contributing 2% and the employee contributing 3%.
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For further advice on running your payroll year end take a look at the guidance information on the HMRC website. We are hosting our annual Payroll End of Year Seminar on Thursday 1st March 2018 at Cineworld, Ashford. For more details and to book your free places please visit our events page.