Running payroll every month, whether yourself or outsourced to payroll experts, is a weekly or monthly routine. But every April, when a fresh tax year begins, new employment law changes come into force and there are annual payroll duties to carry out.
Payroll experts at the Federation of Small Businesses have put together a handy checklist that you can use to get ready for the new tax year and make ticking off your payroll to-do list a breeze.
1. Send your final payroll report
At the end of the tax year, you need to send your final Full Payment Submission (FPS) on or before the last payday of the tax year. The deadline for this is 20 April.
Your FPS tells HMRC about payments made to your employees and any deductions that have been made, for example, National Insurance contributions and income tax.
If you think you’ve made a mistake in this reporting, HMRC has guidance on what you need to do.
2. Update your payroll records and tax codes
You’ll need to use the correct tax code for the new tax year and update your payroll software with this. HMRC will contact you between January and March with any new tax codes to use for employees. This will be a P9T form, or a P9X form for general changes. HMRC’s PAYE Desktop Viewer lets you view and search multiple employee tax codes and notices at once.
Your payroll should include all employees you pay in a tax year, and any employee who has worked for you in the current tax year, even if they leave. You can find detailed guidance on what to do about new employees and leaving employees from HMRC.
3. Update tax rates and thresholds
Every tax year, new rates and thresholds for income tax, National Insurance and student loan repayments are updated, so you’ll need to make sure your payroll software has been updated to reflect this.
4. National Minimum Wage and National Living Wage increases
From 1 April 2023, the new rates will be:
- National Living Wage (23+) increases from £9.50 to £10.42
- National Minimum Wage (21-22) increases from £9.18 to £10.18
- National Minimum Wage (18-20) increases from £6.83 to £7.49
- National Minimum Wage (under 18) increases from £4.81 to £5.28
- The Apprenticeship Wage increases from £4.81 to £5.28
5. Send all your employees a P60
A P60 outlines an employee’s total pay during the tax year and any deductions that have been made. You need to do this by 31 May.
6. Report expenses and benefits
You need to report expenses and benefits to HMRC by 6 July using a P11D form. From a cycle to work scheme to mobile phones, there is a range of benefits and expenses that you might give to employees, and you might need to pay tax and National Insurance on them.
You can find guidance on what your obligations are in each instance on HMRC’s website.
7. Claim the Employment Allowance
You need to do this every tax year. Your HMRC online account will show you how much Employment Allowance you’ve used. Our guide to the employment allowance walks you through how it works, who is eligible, and how to claim.