Spring has sprung in glorious fashion, which heralds not just gamboling lambs and delicious chocolate eggs but also the payroll year end. I know I can’t make it sound as appealing as the previous two items but I hope I can at least make it a little less off-putting!
If you are required to maintain a P11 (payroll deductions working sheet) or equivalent such as payroll software, for at least one employee, you will need to file an Employer Annual Return – P35.
1. The first thing to do is ensure that you are registered with HMRC to file your returns on-line, as virtually everyone is now required to do so. This can take up to 7 days so if you’re not already registered, worth doing immediately.
2. After your last pay run, on or before the 5 April, you’ll need to perform your software’s year end procedure which will produce printouts of P14, P60’s, P32 and P35. If calculating manually then total columns on your working sheets which will give you the figures needed to complete your return. Check the figures on these forms looking for errors.
HMRC now favour computer-generated payroll, as there is less risk of error. Have a look at their site for some suggestions of software – some of which are free.
The P32 shows all the payments you’ve made to the Revenue throughout the year, these amounts will also show as a total on the P35, which is your Employer Annual Return.
Compare the P35 figure with the actual amounts paid in the Tax Year:
- if the amount paid is higher than on the P35, HMRC will automatically repay any balance under £500 to your current year’s payments and notify you.
- if the amount appears to be over £500 you will need to write to your Tax Office in order to try and get a repayment.
- if the amount paid is lower than the P35 you will need to make a balancing payment by the 19th April for postal payments and 22nd April for cleared electronic payments.
Interest may be charged on any funds not received by these dates.
You may also need to complete and file a P38A – Employer Supplementary Form if both of the following apply:
- you’re required to submit an Employer Annual Return – P35
- during the tax year you had employees for whom you didn’t have to complete either a P11 or P38(S) -used when employing a full-time student during holidays, whose earnings do not exceed their personal allowance.
3. You’re now ready to file your return on-line using the HMRC service on their website, this must be done by the 19 May.
Using the forms you’ve already produced, enter your employee’s details, ensuring that you use their correct names, NI numbers, and date of birth.
You can then complete an online P14 for each employee, which will automatically generate an on-line P35.
Submit your on-line P14’s and P35 and print your submission details at the end when prompted. You will also receive an email stating your submission was successfully received, print and file these with the rest of your payroll paperwork.
If you need to make an amendment after filing your return, write to HMRC explaining the amendment and enclosing new versions of the forms that have changed.Only record the difference on these forms and if you amend a P14 you’ll also need to send a new P35, even if there are no changes to the figures on the P35.
You don’t need to keep a copy of the P35 and P14’s (although it is good practice), but you do need to keep a copy of records used to prepare and file your return, so that you are able to provide supporting evidence if HMRC should require it.
If you’re not submitting a P35 you must notify HMRC, otherwise you’ll receive a penalty. You’ll need to provide your employer PAYE reference, contact details, and confirmation of whether a P11D(b) is due.
4. The P60 summarises the employee’s total pay and deductions for the tax year. A copy of the P60 must be provided in paper or electronic form to each employee who was working for you on the last day of the tax year and for whom you are required to complete a P11 or equivalent. This must be done by 31 May.
If an employee has had more than one period of work for you in the tax year, you need only prepare a P60 for the period up to and including the end of the tax year.
If you need to make an amendment to the P60 you must give your employee details of the amendment, either in letter form or a new P60 marked ‘REPLACEMENT’.
5. You also need to complete a P9D or P11D for any employee to whom you’ve provided expenses and benefits during the Tax year.
The HMRC site has details of all the benefits and expenses that need recording.
- the P11D is for recording expenses and benefits provided to most company directors and to employees earning £8500 or more pa.
- the P9D is for employees earning less than £8500.
- you will also need to complete P11D(b) with the total amount of Class 1A NIC’s due, this is taken from all the P11D forms you’ve completed.
If the Revenue has sent you a P11D(b) you must complete and return it even if you haven’t had to complete any P11D’s.
These forms must then be filed with HMRC (again can be done on-line) by 6 July.
Any Class 1A NIC’s due must be paid to the Revenue by 19 July if by post, or 22 July for cleared electronic payments.
Interest may be charged on any late payments.
You may be able to cut down on your end of year reporting by applying to HMRC for a dispensation or PSA, to include all eligible expenses and benefits. Any items covered by these schemes don’t then need to be reported on P9D’s and P11D’s and won’t have tax or NIC’s due on them. These will only cover routine business related expenses and benefits.
The form is downloadable from HMRC website.
All done, time to get back to that chocolate egg!