Setting up your payroll for the new tax year
This blog provides an overview of the steps that you have to undertake as an employer to set up your payroll for the new tax year. It is based on information obtained from the HMRC web site https://www.gov.uk/payroll-annual-reporting
As an employer running payroll, you need to:-
- report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April) and give your employees a P60
- prepare for the new tax year, which starts on 6 April
|What you need to do||When|
|Send your final payroll report of the year||On or before your employees’ payday|
|Update employee payroll records||From 6 April|
|Update payroll software||From 6 April|
|Give your employees a P60||By 31 May|
|Report employee expenses and benefits||By 6 July|
Send your final payroll report before you set up payroll for the new tax year
You need to send your final Full Payment Submission (FPS) on or before your employees’ last payday of the tax year (which ends on 5 April).
If you run more than one payroll under the same PAYE scheme reference (for example for employees you pay weekly and monthly), you should include the end-of-year information in your last report.
Update employee payroll records
For each employee working for you on 6th April, you will need to:-
- prepare a payroll record
- identify the correct tax code to use in the new tax year
- enter their tax code in your payroll software
You should include in your payroll:-
- all employees you pay in the tax year, no matter how much you pay them
- any employee who has worked for you in the current tax year (since 6th April) even if they have already left
Using the correct tax code
HM Revenue and Customs (HMRC) will send you:-
- P9T form for any employees who need a new tax code
- P9X form with general changes for employees whose tax code ends with an “L”
You should use the information new employees give you (usually their P45) to work out their tax code.
Update your payroll software
You should follow the instructions within the software to update your payroll software so it uses the latest rates and thresholds for Income Tax, National Insurance and student loan repayments.
HMRC Basic PAYE Tools
Versions 14.2.14330.88 and later of HMRC’s Basic Payroll Tools check for updates automatically (for example when the tax year changes or new rules come in).
If you are using a version before 14.2.14330.88 then you will have to download and install Basic Payroll Tools again.
Give Employees a P60
You should give a P60 to all employees on your payroll who are working for you on the last day of the tax year (5th April). The P60 summarises their total pay and deductions for the year.
You must give your employees a P60 by 31st May following the end of the tax year.
Reporting Benefits and Expenses
You can report expenses and benefits using your payroll software, if it has this feature. Any expenses and benefits must be reported to HMRC by 6th July following the end of the tax year.
You have to pay any Class 1A National Insurance due on the taxable expenses and benefits you have provided. HMRC must have received your payment by 22nd July (or 19th July if you are paying by post).
For further information on setting up payroll for the new tax year, please contact Stallion Accountancy Services.