Payroll Tax Year End 5th April 2020
The following is an outline procedure for running your final payroll for 2019-20 and setting up your employee records for 2020-21.
Your final payroll will be either the payroll for the calendar month of March or for the last week which is paid on or before 5th April (not the payroll for the last working week ended before the 5th April).
Year End Processing
- If you have not already claimed your Employer Allowance (£3,000 reduction in the amount of Employer's National Insurance payable) then you should first submit an Employer's Payment Summary (EPS), and tick the box ' Employment Allowance claimed '; the 'Submit EPS' button can be found at the bottom of the P32 report in Employee Accounts.
- Send your final Full Payment Submission (FPS) as normal when running your final payroll (including terminating leavers before submitting the FPS), but remember to tick the box 'This is the final FPS submission of the tax year.'.
- For most of you the answers to the questions which appear on the screen will be 'no', but if in doubt, please ask – you may for example need to submit forms P11D and P11D(b) for the year in which case select 'yes'.
- If you forget to tick the 'This is the final FPS submission of the tax year.' box on your FPS submission, or did not make any payments in the final month or week, you will need to submit an EPS and tick the 'This is the final EPS or FPS submission of the tax year.' box.
- Update your employee records with the correct tax code:
- untick any 'week 1 / month 1' boxes which had been ticked;
- apply any tax codes which have been notified by HMRC on a P9 coding notice;
- where no specific tax code notice has been received and the employee is on a standard code ending in 'L' there is no change to the standard '1250L' allowance which remains the same in 2020-21.
- Check employees meet the National Minimum Wage which changes on 1st April 2020 to:
Category of worker
Aged 25 and above (national living wage rate)
Aged 21 to 24 inclusive
Aged 18 to 20 inclusive
Aged under 18 (but above compulsory school leaving age)
Apprentices aged under 19
Apprentices aged 19 and over, but in the first year of their apprenticeship
- Print and distribute a P60 report for each employee who was still employed by you at the end of the tax year (those who had previously left will have received a P45); the P60 summarises their total pay and deductions for the year and you must give your employees a P60 by 31st May.
- Where an employee has received any benefits in kind, for example the use of a company vehicle, private medical insurance paid by the employer, or interest free loans, then these must be reported to HMRC on a P11d on or before 6th July, and any Class 1A National Insurance due paid by 19th July (or 22nd July if paid electronically).
- Following submission of the final FPS/ EPS for 2019-20 you may need to update the Employment Allowance in Company Settings because from 6th April 2020 you will only be able to claim if your Class 1 National Insurance bill was below £100,000 in the previous tax year – see https://www.gov.uk/claim-employment-allowance
- Tax and NIC rates will be updated centrally by your software provider but for further information on rates and allowances for the 2020-21 tax year please see https://www.gov.uk/guidance/ratesand-thresholds-for-employers-2020-to-2021