First things first, grab a cup of tea.
temperature is getting slightly warmer and the fields are filling up with baby
lambs and bright yellow daffodils. For those working within Payroll that can
only mean one thing – Payroll Year End is approaching. But there’s no need to
worry, we’ve got you covered for a smooth and easy roll over into the new tax
year. Below is a guide to help you through with us by your side!
Now, if reading isn’t for you then STOP RIGHT NOW and head over to register
for our year end webinar, which will take you through everything you need to
know. Register here.
First things first, grab yourself a cup of tea – I personally find it
easier to focus on anything with a cup of tea in hand! Now, follow the steps
below and you should sail smoothly through to year end. Just make sure these
steps are followed before processing your final pay run/s for
2019/2020.
Step 1: Review your opening
balances
You’ll need to review opening balances if you transferred over to Xero
part way through the tax year. This relates to both the company and your
employees. You’ll need to make sure any required opening balances were entered
accurately into Xero to ensure all year to date figures are reported
correctly.
Read this help page to find
out how.
Step 2: Review your payroll
settings and reconcile
Click into your Payroll Settings to review all the information that
impacts your payroll reporting. If anything is incorrect you can update this
before processing your final pay run.Take this opportunity to ensure any final
employee payments and changes have been put through.
We know that reconciling your posted pay runs is a regular task for you,
but it’s always a great idea to run your eyes down the reports such as the
P11s, Gross to Net and Account Transactions reports to make sure there are no
unexpected surprises. If you’d like guidance around reconciliation at year end,
please be sure to sign up to one of our free webinars.
Step 3: Process your final
pay run
This is the same process you have been doing throughout the tax year, by
clicking into Payroll > Pay Runs. If you don’t have any payments to make for
the final period of the tax year, then you can post a NIL pay run.
Be careful with your payment date here. For this to be reported as the
final submission of the tax year, your payment date will need to fall in month
12 (6th March – 5th April).
Whilst this final Pay Run is in draft, it’s a good idea to have a look
at your employees’ payslips to confirm year end figures are correct.
Please remember to hit post by your final payment date, if you have a
week 53 Xero automatically adjusts the tax calculation for you. Xero will
automatically send an Employer Payment Summary (EPS) by the 19th April, which
will inform HMRC that it’s your final submission of the year…easy peasy!
Step 4: Share your
employees’ P60s
Once you send your final submission, you can share and download your
employees’ P60s. It is your duty as an employer to provide your employees with
these reports by 31st May.
Please remember the P60 report will only display the total taxable
earnings to date, this is something to look out for if the figures on here
don’t match the year to date figures on your employee’s payslip. You can
generate the P60 reports by following these instructions.
Step 5: Update Employment
Allowance
HMRC has revised who is now eligible to claim
Employment Allowance from the beginning of the next tax year moving forward. If
you still wish to claim the allowance, and meet the new eligibility, you’ll
need to update your payroll settings and let us know which industry sector your
business falls within. Click here for more
information.
Step 6: Review your
employees tax codes and NI category
Keep a lookout for our banner message on the Taxes tab letting you know
when we’ll be updating and rolling forward your employee tax codes. All you’ll
need to do is review the codes to make sure you’re happy with them before your
first pay run of the 2020/21 tax year.
While you’re in the employee’s record, it’s also a good idea to check
that your employees are in the correct NI categories, and check any annual
deferment certificates.
If you’re payrolling any employee car and van benefits, you’ll need to
review and update these benefits for the new tax year.
Step 7: Directorship
settings for the new tax year
Now that we are starting a new tax year, you may wish to review/amend
the NI Calculation method for your Directors. Find more information here.
That’s everything! At Xero we are aware of the upcoming changes for the
new tax year and will be providing features to help with the changes. Like I
said, we really do have you covered.
If you’ve run into any challenges along the way then check out Xero
Central for some helpful articles, such as this. Plus don’t forget
that our friendly support team is also available to give you a helping
hand.