Prepare for year end

Summary

This guide helps you to prepare for payroll year end in Sage Payroll.

Description

Before you process your year end, familiarise yourself with the steps below first.

Resolution

To view a recorded webinar that explains the payroll year end process, access it below

1. Check if you have a week 53

An extra pay run at year end (often called a week 53) happens because a year doesn't split exactly into 7-day weeks.

If you pay your employees monthly, you don't have a week 53.

You have a week 53 if your normal payday is Thursday or Friday and run a:

Weekly payroll
2 weekly payroll
4 weekly payroll

Please read our article Extra pay run at year end (week 53) (opens in new tab).

How tax and national insurance (NI) calculates at week 53 >

To comply with government legislation, tax calculates using a week 1 / month 1 free pay allowance, ignores previous pay and tax, and automatically calculates on a non-cumulative basis.

Tax

To comply with government legislation, tax calculates using a week 1 / month 1 free pay allowance. This ignores previous pay and tax and calculates on a non-cumulative basis. Non-cumulative means that the employee’s year to date figures aren’t included in the tax calculation. Instead, at week 53, tax is calculated as if it’s the first pay run of the tax year.

TIP: If you need to process a week 53, your employees may receive a form P800 to notify them of an underpayment of tax. HMRC rules state that payroll calculations for week 53 allow for extra personal allowances. This protects the level of take home pay that the employee receives. This is perfectly normal, Payroll follows HMRC rules and calculates tax correctly at week 53.

NI

For employees, NI is calculated as in any other pay period, using the weekly, two weekly or four weekly thresholds, as appropriate.

For directors using the per pay run method, their NI recalculates in week 52 cumulatively using the annual thresholds. It then calculates cumulatively again in week 53 still using the annual thresholds. For directors that use the cumulative method, their NI for week 53 is calculated cumulatively as in any other pay period.

2. Process any leavers

Before you process your final pay run, you need to enter the last working day for any employees who have left your employment on or before 5 April 2024.

For the detailed steps to process leavers, read our Dealing with leavers article.

3. Process your final pay run and any holiday pay

Before you can run your year end, you should complete your final pay runs of the 2023/2024 tax year. You must submit no later than 19 April 2024.

Holiday pay

For employees on holiday across the year end, process their holiday pay up to 5 April. Process a new payment in week 1 of the new tax year to reflect the remaining holiday payments.

Update pay cycles

If you process more than one pay cycle, for example, weekly and monthly, make sure that you update the last pay run of the tax year for each pay cycle.

You must submit your full payment submission (FPS) for the last pay run.

TIP: This isn't your final submission for the tax year. You make the final submission when you process your year end.

You must also record your P32 payment to HMRC, and if required submit an employer payment summary (EPS) for month 12.

If you have any outstanding or failed RTI submissions for the 2023/2024 tax year, these show in the HMRC section on the Summary tab.

Submit these in order, from oldest to the most recent.

4. Pensions and payroll year end

If you have a pension scheme set up in your payroll, there are steps you need to complete for your Pension Provider.

NOTE: This is important. It applies to everyone running weekly, 2 weekly, and 4 weekly payrolls.

For further information please read the relevant article:

If your pension provider is not listed, please contact your pension provider and ask about their payroll year end requirements.

Key dates over year end

On or before youremployees’ pay day	Send your final Full Payment Submission (FPS) of the year.
5th April	Last day of the old tax year.
6th April	First day of the new tax year.
By 19 April	Deadline for your final FPS for the previous tax year.
From 20 April	If you've had to make corrections to the previous tax year, you can now submit a supplementary FPS to HMRC to notify them.
By 31 May	Any staff employed by you on or after 5 April 2024 must have their P60s.
By 6 July	Report employee expenses and benefits if they aren’t being processed through payroll.
By 22 July	Pay Class 1A NIC on P11D benefits.