Payroll Year End – It’s not half the headache it used to be

But we still have the paracetamol on standby

In this article, Phase 3’s Adam Ford provides a few things to consider which can help with your journey to payroll year end success…

It’s March by the end of this week and that means a few things for us – not only pancakes and Ash Wednesday (corned beef in Yorkshire?) or the start of Lent for those who observe it but it also signifies the end of another tax year and we are all starting to prepare for the final payments.

Since the implementation of Real Time Information, the theory is that the year end has become much simpler but have you ever tried to submit Earlier Year Updates through the Basic Pay as You Earn Tools when you use a different product?! There are still so many frustrations and, as well as the basics, we know there are lots more things to think about this year.

  1. Do you have a week 53?

Yes, you read it right – for some employers with weekly, 2-weekly or lunar payrolls, there could be 53 weeks in the year. How do you know if you are affected?

In the 2018/19 tax year, tax week 53 is Friday 5 April 2019. You would have a week 53 in the following scenarios:

Your normal pay day is a Friday and…

  • You last processed your weekly paid employees on Friday 29 March 2019.
  • You last processed your fortnightly paid employees on Friday 22 March 2019.
  • You last processed your four weekly paid employees on Friday 8 March 2019.

In each of these instances, you’re next due to process the employees on 5 April 2019: Week 53.

Useful guidance from HMRC can be found here:  Payroll: Annual Reporting and Tasks

  1. Are you ready for the Itemised Pay Statement Amendments?

The government has introduced a new requirement from April 2019 that employee payslips must include the number of hours to which the pay relates, in cases where pay varies depending on the number of hours worked.

The change is in the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) order 2018, which states:

“…where the amount of wages or salary varies by reference to time worked, the [payslip must include the] total number of hours worked in respect of the variable amount of wages or salary either as

(i) a single aggregate figure, or

(ii) separate figures for different types of work or different rates of pay.”

This change applies to anybody whose pay “varies by reference to time worked”.

Hopefully your payroll software provider has supported you through this process and new functionality should have been made available – take time in March to check you are compliant.

  1. Do you have your software update scheduled?

Most software providers will let you know when the year end updates to their products are available and most will not allow you to roll forward to April until they are installed. Have you prepared your timetable for updates and time to test that year end functionality?

We have a full set of recommendations ready for you on what a test script for tax year end should look like, so please get in touch if you would like more information.

  1. Do you know the new year legislation?

Those handy reminders from CIPP and of course the App are really handy but I personally still love the little cards you get to keep on the desk with all the handy rates and allowances in them. Phase 3 have created our own Payroll Fact Cards this year.

If you would like to request a Payroll Fact Card for the 2019/20 tax year, please email us your full details, including postal address and we will send it out to you.

  1. Increases to the National Living Wage (NLW)

For those of us who have salaries linked to the NLW or pesky calculations for checks that aren’t shipped with the system, having these rates early is a blessing! Ensure, as part of your new year testing, you check that the increases are applied correctly across the board and run your usual payroll reports to check compliance will still be valid in April.

Here are the rates for the next year:

Current rate Future rate (from April 2019) Increase
25 years and over

(National Living Wage)

£7.83 £8.21 4.9%
21-24 years £7.38 £7.70 4.3%
18-20 years £5.90 £6.15 4.2%
16-17 years £4.20 £4.35 3.6%
Apprentice rate £3.70 £3.90 5.4%
Accommodation offset £7.00 £7.55 7.9%

 

  1. Increases to Pension Rates

Similarly, we also need to make sure our pensions compliance is in place for the changes to rates from April 2019.

The Pensions Regulator has some handy guidance here:   Increase of Automatic Enrolment Contributions

Ensure your schemes are still compliant and, again, add this to your year-end checklist when testing your new payroll software release.

 

If you have any questions or need support with your payroll then please feel free to get in touch with us:

Email:  info@phase3consulting.co.uk

Telephone:   0800 321 3032

Read more about support for Payroll Services

Read more about support for System Administration

Read more about Business Continuity options

 

About the Author: Adam Ford

Adam Ford - Phase 3 - Lead ConsultantAdam Ford is a payroll professional who leads payroll managed services at Phase 3. As well as extensive experience in the payroll industry, Adam is CIPP qualified and regularly contributes to events and discussions around payroll best practice. Adam’s mission is to share his knowledge of payroll and to ensure the best possible payroll experience for our clients and partners alike. 

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