It’s that time of year again where you have to finish one payroll year correctly and start the next. Here’s what you will need to do:
End of year reporting and tasks
Send your final payroll report of the year.
This has to be done on or before your employees’ payday. This is the ‘Full Payment Submission’ (FPS) that is sent each payroll run.
Send your Employer Payment Summary (EPS)
This lists the statutory pay (maternity, paternity, CIS, etc.) for the year. This is where you can tick the ‘Claim NIC employment allowance = “yes”’ box if it’s appropriate.
You can claim up to £3,000 per year if your NIC bill was less than £100,000 the previous tax year. However, regardless of the size of the company, you can’t claim the employment allowance if:
- You’re the director and the only employee paid above the Secondary Threshold;
- You employ someone for personal, household or domestic work (like a nanny or gardener) – unless they’re a care or support worker;
- You’re a public body or business doing more than half your work in the public sector(such as local councils and NHS services) – unless you’re a charity;
- You’re a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership).
You must also check that the ‘Yes’ in the ‘Final submission for year’ field is ticked.
Update employee payroll records
For each employee working for you on 6th April, you’ll need to prepare a payroll record, identify their new tax code and enter it in to the payroll software.
You should include in your payroll all employees you pay in the tax year, no matter how much you pay them and any employee who has worked for you in the current tax year (since 6 April) even if they’ve already left.
Update payroll software
The software should prompt you to update and to create a new financial year on the last payroll run of the year.
Give your employees their P60
This applies to all staff who are working for you on the last day of the tax year (5th April). This is a summary of their total pay and deductions for the year. This must be done by 31st May.
Report expenses and benefits
This must be reported to HMRC by 6th July.
Tax year 2019 – 20
New tax thresholds
The Personal Allowance rises from £11,850 to £12,500, meaning that no tax is paid on wages up to this figure.
There are three tax bands for earnings above £12,500:
Basic Rate 20% on £1 – £37,500 (i.e. for total earnings £12,501 – £50,000)
Higher Rate 40% on £37,501 – £150,000 and
Additional Rate 45% on £151,001 and above.
New tax codes
Form P9X (2019) from HMRC gives the tax codes to use from 6th April 2019.
The new emergency code is 1250L for all employees (currently 1185L). If HMRC do not send you a new tax code then add the following to the current code:
Add 65 to any tax code ending in L, for example 1185L becomes 1250L;
Add 71 to any tax code ending in M;
Add 59 to any tax code ending in N.
Do not copy or carry over any ‘week 1’ or ‘month 1’ markings.
The Class 1 National Insurance thresholds are also increasing.
The lower earnings limit (LEL) is the point at which you can claim NI credits but NI rate is 0%. For 2019 – 20 it is £6,136 per year. If you employ someone and pay them this amount or more you have to register for PAYE. The bands are:
|Year||Pay per week||Pay per month||Pay per annum||Rate (category letter A)|
|Lower earnings limit (LEL)||£118||£512||£6,136||0%|
|Primary Threshold (PT)||£166||£719||£8,632||20%|
|Secondary Threshold (ST)||£166||£719||£8,632||20%|
|Upper Secondary Threshold (under 21) (UST)||£962||£4,167||£50,000||2%|
|Apprentice UST (AUST)||£962||£4,167||£50,000||2%|
|Upper Earnings Limit (UEL)||£962||£4,167||£50,000||2%|
Employers National Insurance (for category letter A) is 0.00% for earnings at or above LEL up and including ST.
For earnings above ST up to and including UEL/ UST/ AUST, it is 13.80%
The national minimum wage goes up on 1st April:
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
|April 2018 (current rate)||£7.83||£7.38||£5.90||£4.20||£3.70|
Almost all workers are entitled to it by law. HMRC detail the exceptions.
The Workplace Pension
The contribution rates increase for both employers and employees on 6thApril. There are currently no plans for future increases.
The employer’s contributions rise from 2.0% to 3.0% and
The employee’s contributions rise from 3.0% to 5.0%.
This gives a minimum total of 8.0%. However, should the employer pay more, say 4.0% then the employee, should they wish, could pay less, say 4.0% and still maintain the 8.0% minimum. Both employer and employee can pay more than the minimum.Hopefully this has been of use as a checklist of things to do. It is not comprehensive and you should check on statutory sick pay, maternity & paternity pay, student loans, etc.as appropriate.