With the end of the financial year now looming, a number of organisations are gearing up for what can often be an incredibly frantic time.
But from a remuneration perspective, there are many ways to avoid encountering ‘payroll pain’, believes Claire Treadwell, our senior bureau manager.
Admittedly the exact preparatory process will differ from business to business, she stresses. But, in general, there are 10 simple tips that UK firms can follow, to reduce the potential headache of the year end period.
“The first step is to be prepared,” she says. “Ensure all information is to hand, and if any payroll data is outstanding, actively chase line managers if necessary. This will help to avoid the need for any corrections in the next tax year.
“Next, be aware of deadlines. Crucial cut-off dates are now looming but there is still time to prepare in advance, providing they are acknowledged quickly. The final FPS payroll report of the year should be submitted on or before employees’ payday, for example. And employee payroll records and payroll software should then be updated from 6th April.
“Payroll teams also need to reconcile all previous months. Previous reports should be checked against the HMRC website to make sure they balance, and if they don’t, it is important to investigate why. This will make life so much easier before the deadline and prevent any need for Early Year Updates.
“Research the submissions required too. RTI submissions can be confusing, so it is important to understand exactly which ones need to be made. If employees are paid in a final pay period, only an FPS is relevant, whereas if no employees are paid in the final pay period of the tax year, only an EPS is necessary. However, both an FPS and EPS submission will be required if employees are paid in the final pay period, but the FPS has not been marked as the final submission of the year, the FPS has been sent early, there was one or more full tax months when employees weren’t paid, and statutory payments need recovering.
“If the organisation has hit the Apprenticeship Levy threshold, even once, this also indicates the need to submit an EPS. This will ensure that the correct amounts are showing against the company’s record, so remember the Apprenticeship Levy.
“I’d also encourage the payroll profession to consider the treatment of benefits. All employee benefits can be payrolled except employer-provided living accommodation and interest free/low-interest loans. HMRC must be notified before the start of the new tax year, so investigate this as an option and, if interested, register online.
“This HMRC website is also a handy, trusted source of information regarding the latest payroll legislation. Once equipped with new insight, it is then crucial to communicate with employees and pass relevant updates on to them.
“It is definitely ‘spring clean’ time, so use it as an opportunity to review and tidy up payroll. It is important to periodically review all payroll elements and query which ones are still used, if the payroll process is still fit for purpose and whether any changes are required to drive improvement.
“Test payroll software to ensure everything is working as it should. Interrogate some of the data and carry out a manual payroll calculation to double check that the sums add up in line with the latest legislation.
“Finally, after all of this effort, create a year end checklist, use it, update it for the following year and use it again. This is the easiest way to tick every box without missing anything.”
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