Tax Year End Preparations

The end of another tax year is approaching. This is a busy time for payrollers and there are numerous payment and reporting deadlines to be met if penalties are to be avoided. It is vital that employers and their agents understand what needs to be done and when, and that they have all the required information to hand so that the process can be handled smoothly and efficiently. I advise all employers to start their year end preparations early March with the following checklist:

  • Register for PAYE Online
  • Do your Pre-year end checks for missing data/fatal errors
  • Chase missing data/correct fatal errors
  • Finalise payroll records
  • Pay any outstanding PAYE/NICs
  • Complete and file returns
  • Issue P60s

Online filing is now mandatory so if you haven’t already or are a new employer, apply for PAYE online filing straight away via the HMRC website

Most payroll software packages should have some pre-year end checks for missing information and possible fatal errors when sending to HMRC online. If you run these checks or reports early March, you allow yourself enough time to find that information and make any corrections prior to finalising your tax year end. Make sure you have correct full names, dates of birth and National Insurance numbers for all employees you have paid in the year. Ensure you have accurate start dates for new employees, leave dates for any leavers in the year and that you have applied the most up to date tax codes before the final payroll run of the tax year.

Once the last payroll run of the tax year has been processed, the next job is to ensure that your year end P35 totals agree to your year to date payroll totals and your P32 totals (payments made to HMRC). Once all figures agree, you can finalise the tax year end procedures.

Ensure all payments due to HMRC for the entire tax year are paid by 19th April or 22nd if paying electronically. Penalties are now charged where PAYE is paid late on more than one occasion during the tax year and further penalties are charged if payment is still outstanding after 6 and 12 months.

The year end return comprises a form P14 for each employee and a summary of year end payroll totals for all employees for the year (form P35). Most payroll software packages produce the P14s and P35 forms automatically and facilitate online filing. Usually the P35 and P14s are sent online together, however, they can be sent separately. Once the return has been filed with HMRC online an acceptance or rejection message will be sent automatically, usually within a few minutes of sending. Where an error message has been received or the return needs to be amended, the amended return must be filed by the19th May deadline.

Employers are required to give each employee still employed at 5th April 2013 a certificate of pay and tax deducted during the 2012/13 tax year. This certificate is known as form P60 and is the employees’ copy of form P14. These are usually printed automatically through your payroll software. Employees must be given their P60s by 31st May at the latest.

This will be the last year for this year end process as RTI starts in April 2013 where all reporting of your employees’ payments and deductions will be submitted to HMRC on or before every pay day.

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