With businesses facing mounting financial pressure over the last year, those that begin the complex payroll process sooner rather than later will put themselves in the best possible position to hit the deadline.
But there’s no need to panic if you haven’t got all your ducks in a row yet. There’s still time to collate everything you need, and doing this doesn’t have to be difficult. Here are five things you can start doing today to make this year’s payroll year end worry-free.
Payroll year end means gathering data. Whether your numbers are obsessively organised or organised chaos, start collecting everything you need in one location now to make things easier ahead of the big deadline and make sure your employees’ details are up to date.
This also means it’s time to start chasing for any information you don’t have. From expense receipts to benefits, get anyone that owes you data to send it through now.
Reconcile all previous methods
How did you handle payroll year end last year? It’s important that your methods match up year-on-year. If not, this might add extra friction to the payroll process, causing it to take longer and involve more paperwork for you and your team.
So, check your reports against the HMRC website to make sure they balance. If you discover a few discrepancies, find out what’s causing them ASAP to avoid the need to file an earlier year update or amended FPS submission.
Know what submissions you need to make
Do you know if you need to send an EPS, or just an FPS? Now is the time to find out. An EPS is used to report spends that you can’t include on an FPS, such as reclaiming statutory maternity/paternity payments, or claiming the Employment Allowance. This also includes recovering compensation for statutory absences (not including Statutory Sick Pay) and declaring Construction Industry Scheme deductions if you’re a limited company.
If your business claims these or hasn’t paid anyone in the last period before 5 April, then you’ll need to submit an EPS alongside your FPS. And if you paid no employees in the final pay period of the tax year, you won’t be required to file an FPS alongside your EPS. You should be able to submit both via your payroll software.
Apprenticeship levy payments = sending EPS
If you have an annual pay bill of more than £3 million, you’ll need to pay the apprenticeship levy. This also means that you need to submit an EPS and report your apprenticeship levy payments through it. Remember, some sectors have specific rules around the levy, so if your business is a franchise, school, joint venture, employment/recruitment agency, managed service company, short-lived company or conducts off-payroll working, you’ll need to pay this.
Create a checklist
If the responsibilities of this admin-heavy time feel overwhelming, you’re definitely not alone. It’s easy for the huge list of tasks to catch up with you, particularly if you’re struggling to set aside the time to get your data in order.
Above all else, make a list of everything you need to do. Even if you can’t make a start on it today, knowing what’s coming up is half the battle. Once you have the checklist in place, you can reuse it every year – just make sure to update it in line with the expectations for your business, e.g., check whether you need to submit an EPS this year.
Payroll year end doesn’t have to be taxing. There are loads of resources out there to help if you get stuck, from the government’s own website to solutions that can make the process easier.
Stephanie Coward is managing director of HCM at IRIS Software Group