What is HMRC payroll year-end?
The payroll year-end process represents a crucial period for businesses when they must finalize their payroll records for the tax year. Beyond simply processing the last payroll run, it encompasses several essential reporting requirements and deadlines that demand careful attention to detail and compliance with HMRC regulations.
At its core, this annual process involves submitting comprehensive reports to HMRC detailing employee payments and deductions made throughout the tax year. These submissions include the Full Payment Submission (FPS) and, where applicable, the Employer Payment Summary (EPS). Additionally, employers must provide P60s to their staff and implement any necessary tax code adjustments for the upcoming tax year.
A step-by-step guide to year-end
Check when your payroll ends
While the standard payroll year concludes on April 5th, businesses operate on varying pay schedules - whether monthly, weekly, or other intervals. It's possible to complete your year-end procedures before April 5th, but remember that HMRC reports must be submitted on or before your employees' final payday of the year. Accuracy takes precedence over speed, so ensure all information is complete and correct to avoid subsequent amendments.
Verify leavers and new starters
This critical stage demands a thorough review of your workforce changes throughout the year. Clear communication with department managers is essential to maintain accurate records of both new hires and departures. Complete this verification before submitting your FPS or EPS to prevent complications with retroactive changes.
Conduct your final pay run
Execute your last payroll processing of the tax year, ensuring all payments fall within month 12 (typically between March 6th and April 5th). Even if you have no active employees, you must still process a nil payment run. The final FPS and any required EPS must reach HMRC by April 19th, with careful verification before submission to minimize errors.
Finalise your payroll year-end process
Modern payroll software streamlines the year-end procedures. For instance, if you complete your final pay run before April 19th, platforms like Xero automatically handle your final EPS submission to HMRC between the 12th and 19th of the month. Any necessary corrections or claims must be processed by April 19th to maintain compliance.
Prepare and give out P60s
P60s serve as annual summaries of employee earnings and deductions, including tax and National Insurance Contributions. Employers must legally provide these documents by May 31st to all staff employed on the final day of the tax year. Modern payroll systems typically make P60s available from late March.
Transition to the new payroll year
After handling HMRC submissions and P60 distribution, prepare for the new tax year by reviewing the P9X document, which outlines updated personal allowances and tax codes effective from April 6th. Key areas requiring attention include:
Student loan and postgraduate loan repayment thresholds
CA2700 certificates for deferred National Insurance
Childcare voucher eligibility and Basic Earnings Assessment (BEA) requirements
Key dates and deadlines for payroll year end 2025
April 5, 2025: 2024/25 tax year-end
April 5: Final day for employee payroll record and software updates
April 6: Commencement of 2025/26 tax year
April 19: Deadline for final 2024/25 tax year submission
April 22: Month 12 PAYE deadline
May 31: Employee P60 distribution deadline
July 6: Expenses and benefits reporting deadline
July 6: P11D and P11D(b) form submission deadline
July 22: Class 1A National Insurance Contributions payment deadline for benefits in kind (July 19 for non-digital systems)
Streamline year-end payroll
Success in managing year-end payroll hinges on thorough preparation and understanding of potential challenges. HMRC-recognized software solutions offer significant advantages through features like automated RTI submissions, streamlined adjustments, and precise payroll calculations. These digital tools ensure data accuracy while providing secure, accessible storage for all relevant information, enabling efficient team collaboration and reducing stress during this crucial period.
The combination of careful planning, clear understanding of requirements, and utilization of appropriate technology transforms the potentially complex year-end process into a manageable, confident operation for businesses of all sizes.