End of year processes
Taking on an employee
At the end of the tax year, you will need to make your final submissions and deal with the relevant end of year documents. You will also need to get ready to start the new tax year.
In this section, we look at the various tasks you may have to deal with to complete the end of year process. We also look at the benefits and expenses rules on a separate page, because if an employer has provided benefits or expenses during a tax year then they may have to report them by 6 July following the end of the tax year.
Week 53 payments
As you approach the end of the tax year, you should think about whether you have any week 53 payment issues. See our guidance on choosing a pay period, for more information on this.
You should send your final Full Payment Submission (FPS) of the tax year (which ends on 5 April) on or before your employees’ last payday of the tax year as normal. If you are unable to send your submission on or before the pay date this may be recognised as a late submission although HMRC will usually accept your final FPS until the 19 April (this is the EPS filing deadline also). After that date you may not be able to file an FPS and may have to send an Earlier Year Update (EYU).
You also need to notify HMRC that you have made your final FPS submission for the tax year:
If you are an online filer: you will usually do this via your payroll software, often at the same time as you submit your final FPS. However sometimes, depending on the circumstances, you will do this via an Employer Payment Summary (EPS) (for example, where you did not pay anyone in the final pay period of the tax year).
Users of HMRC’s Basic PAYE Tools (BPT) should check the user guide which contains step-by-step help on the most common functions of BPT, including how to make final submissions for the tax year. Please be advised that in BPT you submit a report telling HMRC you have made your final submission as a separate step to sending the actual final submission.
If you are paper filer: to finish the tax year you should just complete form RT2/RT5 as normal. More information on end of year tasks is available in booklet RT7 – Guidance for employers exempt from filing Real Time Information online.
Please note there are no longer any further questions or declarations to complete for HMRC at the end of the tax year.
For more on finishing the tax year, including what to do if you make a mistake in your final FPS of the year, see the GOV.UK guidance.
Sending an Earlier Year Update (EYU)
Prior to the 2021/22 tax year, where amendments are needed to payroll data after 19 April following the end of the tax year, employers may have needed to submit an Earlier Year Update. HMRC have now simplified the process and, since 19 April 2021, will instead accept an additional Full Payment Submission instead of an EYU.
This means amendments to tax years must be made as follows:
- Year to 5 April 2020 – EYU or FPS will be accepted
- Year to 5 April 2021 – FPS only
- Year to 5 April 2022 – FPS only
- Year to 5 April 2023 – FPS only
If you need to send an EYU for a tax year, please note that this should show the difference between the last reported final figure and the correct final figure(s) for the tax year. For example, if a figure previously reported as £1,900 should have been £2,300, the EYU should show ‘£400’ – not £2,300. Similarly, if you want to reduce a figure previously reported as, say, £1,000 to £700, the EYU should report ‘-£300’ – with a minus sign in front – not £700.
Many employers who need to send an EYU for an earlier year will find that their payroll software already includes that functionality. However, some employers will find that their payroll software does not include the EYU functionality. In that case employers can submit an EYU using HMRC's Basic PAYE Tools (BPT).
If you do use HMRC’s BPT software to send an EYU, then you can find a guide that gives you step by step help on GOV.UK. It contains examples of the screens you will see in BPT and simple to follow instructions.
A recent BPT update has included the change and BPT will no longer support an EYU for 2020/21 and future years. An EPU will continue to be available from within BPT for the 2019/20 tax year.
Whether you are an online filer or a paper filer, you will need to give a P60 to all employees on your payroll who are working for you on the last day of the tax year (5 April). Leavers within the tax year (that is, before the 5 April) will not get a P60 – these employees should have already been provided with a P45 when they left your employment.
The P60 confirms an employee's final tax code and shows their total earnings for the year, as well as the year's total tax deductions and National Insurance contributions. You must give your employees a P60 by 31 May, so, 31 May 2023 for the 2022/23 tax year, 31 May 2024 for the 2023/24 tax year and so on.
Payroll software normally automatically produce P60s, however if you are a paper filer, you can order copies from HMRC to complete by hand.
Users of HMRC’s Basic PAYE Tools (BPT) should check the user guide which contains step by step help on the most common functions of BPT, including how to issue P60s.
You should note that blank P60s are not available from HMRC's website.
Where necessary, employers may issue duplicate P60s – for example where an employee loses theirs – but they must be clearly marked as such.
What to do if you miss the P60 deadline
If you miss the 31 May deadline, you should make sure you give your employee their P60 as soon as possible.
Strictly, HMRC have the discretion to charge an initial penalty of up to £300 per late form and can thereafter charge a further penalty of up to £60 per day for each day that the failure continues. However, it is our understanding that provided you have taken action to remedy the oversight without delay, HMRC are unlikely to impose any such penalties.
Expenses and benefits forms
If you provided your employee with taxable expenses or benefits during the tax year, and you are not payrolling them, you usually need to report these to HMRC by 6 July after the tax year in question – so 6 July 2023 for the 2022/23 tax and 6 July 2024 for the 2023/24 tax year and so on. The employee then pays income tax on the P11D benefits through an amendment to their tax code (or in another way agreed with HMRC).
You may have to pay Class 1A National Insurance to HMRC on the value of some benefits you provide.
You can find a basic guide to expenses and benefits for employers on GOV.UK. See our detailed guidance on expenses and benefits to help you understand this topic further (including how to ‘payroll’ benefits so that you can avoid completing a P11D).
To report benefits and expenses to HMRC, use the following forms:
- P11D: for recording the expenses and benefits. As well as sending a copy to HMRC, you will also need to give a copy of form P11D to employees, as appropriate, by 6 July. Employers may consider it appropriate to provide copy P11Ds to employees who left during the tax year, but they are not required to do so unless the employee makes a written request.
- P11D(b): for reporting the total amount of Class 1A National Insurance contributions (NIC) due. You add this up from all the forms P11D you have completed. This form is also due for submission to HMRC by 6 July.
- In July (on the 19 or 22 – depending on your usual payment method) you also need to pay any Class 1A NIC that are due. So if you have Class 1A NIC to pay for the tax year ended 5 April 2022 you will need to file the form P11D(b) by 6 July 2022 and make the payment by either 19 or 22 July 2022, depending on your method of payment.
If you are an online filer: you can complete expenses and benefits forms via your payroll software, if it has this feature. For the other reporting option, see GOV.UK (there are no longer any paper options available for online filers, however reporting online allows employers to submit end of year expenses and benefits forms P11D, and P11D(b) in one click without having to worry about posting them and also right up until the deadline).
Where no benefits have been paid during the tax year and a reminder is received from HMRC (you may get one of these if HMRC are expecting a submission from you but you have not actually provided your employee with any benefits or expenses during the relevant tax year), employers can complete the Employer – No return of Class 1A form to advise HMRC that they have no P11Ds to submit and no Class 1A return to make.
If you are a paper filer: you should contact the Employer Orderline and ask them how you can obtain the forms you need.
There are penalties for the late submission of P11Ds and for any errors on the form (inaccuracy penalties), even where these are subsequently amended – see the GOV.UK guidance on Correcting an error. There are also penalties for the late submission of P11D(b)s and interest is charged on the late payment of Class 1A NIC from the due date.
Dealing with benefits and expenses forms is not optional – if you have provided an employee with expenses or benefits that need to be reported, then you must send HMRC/your employee the appropriate form/s.
Starting a new tax year
If you are an online filer: you’ll need to update your payroll software, so it uses the latest rates and thresholds for income tax, NIC, student loan repayments etc. You may receive an automatic update prompt to do this or you may need to update your payroll software manually – it will depend on the type of payroll software you use and you should follow their instructions. Your payroll software should then carry forward the relevant employer and employee information into the next year to save you having to set it all up again.
Users of HMRC’s Basic PAYE Tools (BPT) should check the user guide which contains step by step help on the most common functions of BPT, including how to activate a new tax year. An update to the Basic PAYE Tools will be released at the end of March 2023 to support the 2023/34 tax year. It is important that you update and are using version 23.0 from 6 April 2023.
Where possible, you should create a separate backup of your payroll data after you have completed your final payroll of the old tax year BEFORE you move into the new tax year.
If you are a paper filer: the key task in terms of setting up payroll records for the new tax year is to set up a form RT11 ‘Deductions Working Sheet’. For more information see booklet RT7 – Guidance for employers exempt from filing Real Time Information online.
Updating employee records
All employers will need to update employee records, for example, identify and input the correct tax code to use in the new tax year, if your software does not do this for you. If it does, you should double check that it has been updated correctly.
The new tax code will either be in accordance with the P9X form – which advises general changes to tax codes, for example for employees whose tax code ends with an ‘L’ – or in accordance with instructions from HMRC (given on form P9T) for any employees who need a specific new tax code. You will need to do this before you pay your employees in the new tax year.
HMRC should issue P9T forms between January and March to notify you of any new tax codes you will need to use for employees in the new tax year. Please note you may receive tax coding notices as late as the end of March. (If you get your tax codes on paper and do not receive your paper P9T notices in time for the first pay period on or after the new tax year), you can request a duplicate by contacting the Employer Helpline.
If an employee’s tax code isn’t changing fundamentally and just needs uprating for the new personal allowance, HMRC won’t contact you separately and you should carry forward the employee’s tax code to the new tax year in accordance with the instructions on form P9X.
For more information on tax codes, including how you receive them, see our tax codes section. Please note that there may be other non-tax changes that you need to implement for the beginning of the new tax year – for example, changes to the minimum wage rate.
Each year, HMRC issue an annual guidance document, P9X, setting out the payroll tasks that employers need to do to get ready for the new tax year.
One task will be identifying the correct tax code to use in the new tax year for each employee who will be working for you on 6 April.
As most tax codes are based on the personal allowance, they can, with a small adjustment to take account of any raises in the personal allowance, be carried forward into the new tax year. P9X explains how to uprate these general tax codes for employees ready for the next tax year.
This should be done after the last pay run of this tax year – to ensure a smooth transition into the new tax year.
The P9X for 2023/24 tax year can be found on GOV.UK.
If you don’t understand what tax code to use for the new tax year or you have any other payroll problems you should call the Employer Helpline.