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As the tax year comes to a close, businesses must prepare for payroll year-end tasks to ensure compliance with tax laws and regulations. Whether you are seasoned payroll personnel or doing it for the first time, it can be a busy and complicated time of year with numerous dates to adhere to and obligations to fulfil. Failing to complete these tasks on time can result in penalties and financial discrepancies.
In this guide we will outline key payroll year-end tasks to ensure your year-end runs smoothly and the associated deadlines to help you stay on track.
The usual payroll year-end date will be 5th April 2025, however every business pays their employees over different periods – I.e. weekly, monthly, fortnightly, therefore your payroll year-end date may differ slightly. You can submit Full Payment Submission (FPS) and Employer Payment Summary (EPS) reports to HMRC on or before your employees last pay day of the year, which will most likely fall before 5th April 2025.
Before processing year-end payroll, confirm that all employee records are accurate and verify any new starters or leaving during the year. It’s vital to do this before submitting your Full Payment Submission (FPS) and Employer Payment Summary (EPS) or you’ll have a hard time trying to make amends after submission. Check details such as:
Ensure all wages, bonuses, commissions, and overtime payments are correctly processed. If you plan to issue year-end bonuses, verify that they are recorded correctly and taxed appropriately. If you haven’t already, now submit your FPS – this can be submitted on or before your employees last pay date. The FPS tells HMRC what you have paid your employees throughout the year and what deductions you have made. If you use payroll software then this can often be sent to HMRC seamlessly at the click of a button.
The deadline to send your Employer Payment Summary (EPS) is 19th April 2025 if required. You will need to send an EPS if you didn’t pay any employees in a tax month or if you wish to close your business and won’t be paying any employees in the future. More information about EPS submissions and whether you will need to submit one can be found here.
HMRC will send you tax codes for employees who need a new code (this will be on a P9T form) and a P9X form will indicate those who require changes whose tax code ends in L (L means they are entitled to the standard tax-free personal allowance). Once tax codes have been received you can update your payroll software with the new tax codes and any wage changes, review compliance changes, including new minimum wage laws and communicate any payroll updates to employees.
A P60 summarises total pay and deductions made throughout the year. Every employee you have paid during the tax year must receive a P60 by 31 May 2025.
From 6 April 2025 (the first day of the 2025/26) tax year you must tell HMRC what expenses or benefits you have paid each employee in the previous tax year and pay Class 1A National Insurance Contributions as applicable on the taxable benefits or expenses you have provided. The HMRC will no longer accept P11D submissions in paper format and they must be electronically submitted – this can be done smoothly with P11D submission software.
Final Thoughts
Payroll year-end tasks may seem overwhelming, but careful planning and organisation can make the process smooth. Stay proactive, meet all deadlines, and seek professional guidance if needed to avoid errors and penalties. If you use payroll software the process will be seamless but and can eliminate a lot of headaches.
For more information about payroll software and support from Pegasus then please contact us today.
Posted On: February 13, 2025
