Payroll year end 2023 has arrived – and the HMRC deadline is the 19th April. It should involve you processing the standard week-52 or month-12 payroll plus some additional steps to close the year. But everything needs to be done right.
This article is here to help you prepare for the arrival of payroll year-end. In addition to submitting all your financial reports by 19 April 2023, you need to prepare for the next tax year and get P60s to all employees by 31 May 2023 at the latest. Read on to make sure your 2023 year-end payroll is a successful one.
The Steps For Completing Year-end Payroll
Step 1: Check The End Date of Your Payroll
Sometimes, payroll doesn’t end on week 52. It may end on week 53, 55 or 56; in any case, you will need to complete an additional payroll. In these circumstances, two things are true:
- Your payrolls are processed weekly, fortnightly or four-weekly.
- Your regular payroll date is 5 April.
If you do weekly payroll falling on 5 April, you will end on a week 53 payroll. For fortnightly payroll, you will need a week 54 payroll, and for four-weekly payroll, you will need a week 56 payroll. This will involve switching employees to a week one tax code for the additional payroll. Your payroll software should handle this automatically but it is wise to check.
Step 2: Process Leavers and New Starters
If people have left your employment over the last 12 months, or new starters have arrived, you need to check they were processed properly. All your bases need to have been covered and you don’t want to miss anything. Get this done before submitting your Full Payment Submission (FPS) or Employer Payment Summary (EPS).
Once you enter the next payroll year, these details are not straightforward to amend.
Step 3: Undertake The Final Pay Run
You can’t run your year-end until you have completed the final pay run for 2022/23. Check this against whether you had a week 53, 54 or 56 and, once it is done, you can submit your FPS and EPS, if required. This must be done no later than 19 April.
You also need to record your P32 payment to HMRC. Try to avoid errors as making adjustments becomes complicated after 19 April. It can be an unwelcome admin burden that everyone involved would rather avoid.
Step 4: Carry Out Your Year-end
Payroll software makes this fairly simple. Choose the tax year you wish to complete on the year-end screen and submit your final EPS. This submission differs from monthly/quarterly EPS submissions as it will include the end-of-year declarations.
Once this is done, you can carry out your year-end and make the final submission for this tax year. Now, you are ready to prepare your P60s.
Step 5: Prepare Your P60s
Every individual under your employment on the final day of the tax year (5 April) will need a P60 by 31 May. This even includes deemed employees who, due to the Intermediaries Legislation (IR35), are now on payroll. The P60 summarises an employee’s pay and deductions for the tax year. It is often the final task to be completed following year-end.
Payroll software can generate P60s and share them online or print them off. You shouldn’t create your P60s until the final payslip has been issued and it is wise to allow time for feedback from employees in case there are any errors.
Step 6: Check The P9X and Begin The Next Payroll Year
Closing off one tax year and beginning the next is often seen as a single process. But the new year checklist can be bigger than the year-end one. The P9X is important for this.
P9X is an HMRC-published document. It explains any changes to tax codes for the coming tax year. This information is also summarised in software vendor support documents. It might be worth checking those out before you make the first pay run of the new year. But government web pages are the original source of information.
When preparing the new payroll year, you also need to check other thresholds like student loans. These are often hard-coded into yearly updates by software vendors, but you should check them nevertheless.
Some manual processes need to be undertaken:
- Renew CA2700 certificates for anyone who has deferred National Insurance Contributions.
- Review individuals receiving childcare vouchers – check whether they need an amendment to their entitlement by completing a Basic Earning Assessment (BEA).
Important Payroll Year-end Dates
We have already identified a few key dates for payroll year-end. But there are others, so we will summarise them here.
- 5 April: The end of the 2022/23 tax year.
- Before 6 April: Update employee payroll records and payroll software.
- 6 April: The start of the 2023/24 tax year.
- 19 April: The deadline for final submission for 2022/23.
- 22 April: The deadline for your month-12 PAYE.
- 31 May: The deadline for sending out P60s to your employees.
- 6 July: This is when you must report on expenses and benefits (payroll software should do this automatically).
- 6 July: This is also the deadline for submitting P11D and P11D(b) forms.
- 22 July: this is when payment of class 1A National Insurance contributions relating to Benefits in Kind must go to HMRC.
Closing Thoughts On Payroll Year-end
When you don’t take a systematic approach, payroll year-end can feel daunting. But, broken down into steps, it is actually very manageable and doesn’t need to be stressful. This will enable you to keep focusing on your business without being overly distracted by these administrative responsibilities.
Planning ahead is important, so keep the list of key dates to hand. This will enable you to take your time getting processing done. It will also help you make the necessary preparations for the coming year. Payroll software is very helpful for keeping on top of everything throughout the year as well as preparing reports and documents when the time comes.
As with most business tasks, software can play a key role by automating many of the manual procedures involved with year end and payroll. If your business sill heavily relies on spreadsheets and manual processes, it would be prudent to start considering digital transformation.
Why choose Eventura for your digital transformation journey?
Eventura have been helping businesses in their digital transformation journey for two decades. From the implementation of industry-leading ERP solutions such as Sage 200 and NetSuite, to helping them move their entire operations to the cloud and away from costly and restrictive on-premise solutions.
As well as being NetSuite Solution Providers, Sage 200 Partners and Microsoft Gold Partners, we also offer a wide range of managed IT services, meaning we can take your business as a whole and help it achieve digital transformation.
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