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Payroll Annual Reporting and Tasks

End-of-year payroll tasks for employers include reporting on the previous tax year, giving employees a P60, and preparing for the new tax year.

Check how to send your final payroll report, update employee payroll records (using the right tax code), update your software, and how to report expenses and benefits.

Sending Your Final Payroll Report to HMRC

Sending in a final Full Payment Submission (FPS) is part of the normal process of reporting payroll to HM Revenue and Customs.

Even so, HMRC needs to receive your Full Payment Submission no later than the last payday of the tax year for all your employees (ending 5th of April).

As a rule, most types of modern payroll software contain a field titled ‘Final submission for year’. If so, you should insert ‘Yes’.

Some employers will run several payrolls under the same PAYE scheme reference (e.g. for employees paid on a weekly and monthly basis). In this case, you should include the end-of-year information in your last report.

Note: You would need to submit a completed end-of-year return (using forms E92 and E89) if you claimed a National Insurance holiday for new employers.

When to Send an EPS Instead?

There are certain situations when you should submit your final report in an Employer Payment Summary (EPS) instead of an FPS, such as if you (any):

  • Forgot to insert ‘Yes’ in the field marked ‘Final submission for year’ in your last FPS.
  • You have software that does not contain a ‘Final Submission for year’ field on the FPS.
  • Did not pay any employees in the final pay period of the tax year.
  • Submitted your final FPS early and you did not pay any employees for one or more full tax months during the last tax year.
Sending a Late Final Report to HMRC

If you are late sending in your final report to HM Revenue and Customs (HMRC) you can still send a Full Payment Submission (FPS) before the 20th of April.

But, you would need to supply the year-to-date figures when sending an FPS to correct your payroll data for a previous full tax year if it is after April the 20th.

What if the payroll software you use does not allow you to send an FPS after the 19th of April? In this case, you should send an Earlier Year Update (EYU) and give the difference between your last report and the final figures for the tax year (i.e. not the year-to-date figures).

Note: You can download HMRC’s Basic PAYE Tools if your payroll software does not allow you to send an Earlier Year Update (EYU).

Final FPS ‘Week 53’ Payments

You may need to use your software to make a ‘week 53’ payment in your final FPS of the year (e.g. when paying employees weekly, fortnightly, or every four weeks). If so, select the field titled ‘Tax week number’ of your FPS, and insert:

  • ’53’ (if paying weekly)
  • ’54’ (if paying fortnightly)
  • ’56’ (if paying every 4 weeks)

Note: HMRC uses a P800 form to help them calculate tax overpayments and underpayments (e.g. if an employee owes tax following a ‘week 53’ payment).

If You Make a Mistake:
  • Send an additional FPS with corrected year-to-date figures by the 19th of April (entering ‘0’ in ‘Pay in this period’) if you made a wrong payment or deduction.
  • Send an EYU showing the difference between the amounts on the wrong FPS (correcting the year-to-date amounts) after the 19th of April if you made a wrong payment or deduction. So, you should not give the year-to-date amounts.
  • Send an additional FPS with the correct payment date by the 5th of April (putting ‘0’ in ‘Pay in this period’) and give the year-to-date figures if you made a wrong payment date.

Updating Your Employee Payroll Records

There are several tasks employers need to complete for each employee they have working for them on the 6th of April each year. For example, you need to (all):

  • Prepare a payroll record.
  • Identify the correct tax code for use in the new tax year.
  • Enter your employees’ tax code into your payroll software.

Note: Another section provides further information on understanding your employees’ tax codes and what the numbers and letters mean.

Your payroll should also include:

  • All employees that you pay in the tax year (regardless of the amount you pay them).
  • Any employee who worked for you in the current tax year (since the 6th of April) even if they already left your employment. You can find out what to do when an employee leaves or retires in another section.

HM Revenue and Customs (HMRC) will send you certain documents to make sure you are using the right tax code, such as a:

  • P9T form (for employees who need a new tax code).
  • P9X form with general changes (for employees with a tax code ending in the letter ‘L’).

You can view, search, and sort large numbers of employee tax codes and notices using the PAYE Desktop Viewer application from HM Revenue and Customs.

Work Out Your New Employee’s Tax Code

After taking on a new employee you would need to work out which tax code (and starter declaration) to use in your payroll software and report it to HMRC using a Full Payment Submission (FPS) – either on or before their first payday.

How to Update Your Payroll Software

Your payroll software provider will supply you with instructions on how to update it. Hence, it will use the latest rates and thresholds for Income Tax, National Insurance, and for student loan repayments.

HMRC Basic PAYE Tools

You can check which Basic PAYE tools version you have at the bottom-left corner. If yours is a version prior to 14.2.14330.88 you would need to download and install Basic PAYE Tools once more to get the updated version.

Note: Version 14.2.14330.88 (and later) check for updates by automatic process (e.g. changes to the rules or the tax year).

Giving Your Employees a P60

The purpose of a P60 is to summarise the total pay and deductions of an employee for the year. So, employers need to give a P60 to all their employees on payroll if they are working on the last day of the tax year (no later than the 31st of May).

You can order copies of P60s from HM Revenue and Customs if your payroll software is unable to produce them ‘automatically’.

To Change a P60 (either):
  • Issue a new P60 marked as a ‘replacement’ (paper or electronic).
  • Give your employee a letter confirming the changes made to their P60.
Using Software to Report Expenses and Benefits

In most cases, you will be able to use your payroll software to report expenses and benefits to HMRC. But, you must complete it no later than the 6th of July.

Important: You have until the 22nd of July (19th July if paying by mail) to pay employers’ Class 1A National Insurance due on the taxable expenses and benefits you provided to your employees.

HMRC Payroll Annual Reporting and Year End Tasks