Payroll Year End: What Employers Need to Know

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Every 5 April, the tax year closes and every employer in the UK has some housekeeping to do. Get it right and the new tax year starts smoothly. Get it wrong and you could face penalties, unhappy employees and a pile of corrections in April.

This guide explains what payroll year end actually involves, the deadlines to know, and how to complete your final payroll submission with confidence.

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What Is Payroll Year End?

Payroll year end is the process of closing off one tax year and preparing for the next. In the UK the tax year runs from 6 April to 5 April, so payroll year end falls at the start of April.

In practice, it means three things:

• Sending HMRC your final payroll report for the year
• Giving your employees their year-end paperwork
• Updating your payroll for the new tax year

It sounds like a lot, but each step is straightforward once you know what is required.

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Key Payroll Year End Dates

Here are the dates worth putting in your diary:

• 5 April: the tax year ends
• 6 April: the new tax year begins and new rates and thresholds usually take effect
• Last payday of the tax year: your final Full Payment Submission (FPS) must be sent on or before this date
• 31 May: deadline to give employees their P60
• 6 July: deadline to file P11D forms for expenses and benefits, and to give copies to employees
• 22 July: deadline to pay any Class 1A National Insurance owed on benefits (electronic payments)

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What Is The Final Payroll Submission?

Your final payroll submission is the last report you send to HMRC for the tax year through your payroll software. Most employers make it as part of their last Full Payment Submission (FPS), by ticking the box marked "final submission for the year" (sometimes labelled "last FPS of the tax year").

A few things to know:

• It must be sent on or before your last payday of the tax year, or at the same time as it
• If you do not pay anyone in a particular period, you may need to send an Employer Payment Summary (EPS) instead and mark it as the final submission
• Once it is sent, you do not need to send a separate end-of-year return. This replaced the old P35 process

If you spot a mistake after sending it, you can usually correct it by sending a further FPS for that year. It is much easier to check before you submit, which is where the checklist below comes in.

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Your Payroll Year End Checklist

Work through these steps in the weeks before 5 April.

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1. Check your employee records

Confirm names, addresses, National Insurance numbers, tax codes and pay details are correct for every employee. Do the same for anyone who has left during the year. Small errors now are far easier to fix than errors in your final submission.

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2. Reconcile your payroll

Check that the totals in your payroll software match the payments you have made to employees and to HMRC. Look for any outstanding PAYE and National Insurance balances and make sure everything has been paid.

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3. Process your last payroll of the tax year

Run your final pay run and make sure all pay, deductions, statutory payments (such as sick pay, maternity pay or paternity pay) and benefits are included.

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4. Send your final submission

Submit your last FPS on or before your last payday and tick the final submission indicator. If you use payroll software, it will usually prompt you to do this. If you are unsure, check before you send.

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5. Prepare your P60s

A P60 summarises each employee's pay and tax for the year. You must give one to every employee who is on your payroll on 5 April, by 31 May. Most payroll software can produce these automatically.

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6. Deal with expenses and benefits

If you provide benefits such as company cars or private medical insurance, you will need to report them on form P11D and pay any Class 1A National Insurance. If your benefits are payrolled, you do not need to file a P11D for them.

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7. Get ready for the new tax year

Update your payroll for 6 April. That means:

• Applying any new tax codes issued by HMRC
• Updating National Insurance thresholds and rates
• Checking the new National Minimum Wage and National Living Wage rates, which usually change on 1 April
• Updating statutory payment rates
• Making sure your payroll software is updated to the latest version

Always use the rates published by HMRC and GOV.UK for the tax year you are working in.

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Common Payroll Year End Mistakes

These are the issues we see most often:

• Leaving it to the last minute. Year end often falls close to Easter and bank holidays, so plan earlier than you think you need to
• Forgetting to tick the final submission box. Without it, HMRC may not treat your year as complete
• Not updating tax codes and thresholds. This leads to incorrect pay for employees from the first pay run of the new year
• Missing leavers or starters. Check that everyone who worked for you in the year is accounted for
• Overlooking benefits. Unreported benefits can create unexpected tax bills later

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Why Get Help With Payroll Year End?

Payroll year end is not difficult, but it is unforgiving. Deadlines are fixed, penalties apply for late or incorrect filings, and mistakes can affect your employees' pay. 

At Prosper, our payroll services take the year end off your plate. We check your records, handle your final submission and prepare your P60s, so you can focus on running your business.

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Payroll Year End FAQs

What is payroll year end?

Payroll year end is the process of closing off the tax year (6 April to 5 April) and preparing for the next. It involves sending HMRC your final payroll submission, giving employees their P60s and updating your payroll for the new tax year.

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When is the final payroll submission due?

Your final submission must be sent on or before your last payday of the tax year. Most employers make it as part of their last Full Payment Submission (FPS) by ticking the final submission box.

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Do I still need to send a P35?

No. The old P35 end-of-year return has been replaced. Sending your final FPS (or EPS) with the final submission indicator ticked is how you close the year with HMRC.

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What happens if I miss the final submission?

HMRC may not treat your tax year as complete, and late or incorrect filings can lead to penalties. If you realise you have missed it or made a mistake, send a corrected or additional submission as soon as possible and speak to your accountant if you are unsure.

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Ready For a Stress-Free Payroll Year End?

If you would like support with your payroll year end, or want to talk through your current payroll set-up, get in touch with our team today. We will make sure everything is in order well before 5 April.