Home Business How to Prepare for the End of the Payroll Year

How to Prepare for the End of the Payroll Year

by jcp

The payroll year is typically associated with tedious admin, lots of paperwork and invoice chasing.

This article will outline important tips and steps to follow in advance of preparations for the 2022/2023 tax year – so it isn’t left to the last minute!

Know what is needed

Firstly, it is important to know exactly what is required in terms of proof, paperwork and documentation. Small businesses should conduct thorough research in order to understand what submissions they need to make. This includes working out what is needed for either an Employer Payment Summary, or a Full Payment Summary if necessary.

All relevant documentation can thus start to be compiled in one, easily-accessible location. Those in charge of these documents should also ensure that these are well backed-up too. By keeping organised, this helps to prevent the need for an amended Full Payment Submission.

Businesses should make use of the HMRC’s online resources – which serve as the best resource in understanding what is needed for submissions. They can further make use of the payrolling benefits and expenses online service – however, they must have already been registered for this prior to the start of the new tax year.

Watch out for legislative changes

Tax changes and initiatives introduced by the government throughout the year can vastly change a payroll.

Many businesses fail to keep themselves informed of legislation changes prior to the end of the payroll year. For instance, they should note down changes such as the start of the Basis Period Reform transitional period which will be introduced ahead of the 2023/2024 year.

While no changes apply to the 2022/2023 payroll year, there will be a noticeable change to the 2023/2024 year concerning National Insurance.

As most will be aware, the Health and Social Care levy has been added on top of National Insurance contributions for working-age employees, those self-employed and employers during the current tax year.

However, from April 2023, the Health and Social Care levy will be separated from National Insurance contributions. National Insurance contribution rates will fall to their 2021/2022 levels. The levy will become a new separate tax of 1.25% which must be reported separately on FPS and payslips using the NIC thresholds.

As such, payroll software may need to be upgrade or updated in preparation for this shift.

Invest in appropriate payroll software

“Payroll software typically takes away from the labour-intensive administration tasks associated with the run up to the end of the payroll year,” explains David Soffer, of price comparison site, ProperFinance.co.uk

Payroll software is an application that helps businesses to manage, process and pay their employees both accurately and on time. Iris, More Pay and Pecunia Pro are just a few recommended applications that adhere to government guidelines.”

“If the above steps are introduced and followed in the next few months then this should help in next year’s run up and reduce any stress associated with the April 2023 deadline.”

Conclusion

The above has summarised the basic steps that need to be taken ahead of the end of the payroll year next April 2023.

While the end of the payroll year is typically associated with stress and an abundance of admin, forward planning can help to make things a lot easier.

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