Are you ready for the PAYE end of year?

The usual suspects

The PAYE end of year is nowadays mostly less of a hassle than when all the reports had to be made on paper. Nevertheless, there are boxes to tick and procedures to follow. Primarily, it’s vital that the “final submission for the year” box is checked in your software. Forgetting to notify HMRC is a common mistake and results in it issuing warnings with threats of penalties.

If you don’t pay anyone in the final tax week or month you still need to notify HMRC that you’ve made your final submission for 2024/25. Do this by submitting an employer payment summary (EPS) with the appropriate box checked.

Steps to take

Review directors’ pay. One of the less obvious steps you should take before closing your payroll for 2024/25 is to review the NI position for company directors, especially if they are paid irregularly or have become a director during 2024/25.

Extra pay periods. Because a year is not precisely 52 weeks long, if you pay any of your employees weekly, fortnightly or four-weekly it might be that you have an extra pay period in 2024/25. Your software will make the PAYE calculations correctly but on your full payment submission (FPS) the “tax week number” must be shown as: 53 for weekly paid employees, 54 if they are paid fortnightly and 56 for those paid every four weeks.

Prepare for next year. After you’ve completed the end-of-year routine for 2024/25 you follow instructions from your software provider and update your payroll app for 2025/26. This is especially important because of the changes to the NI thresholds and rates which apply for paydays on or after 6 April 2025. Before running the first payroll for 2025/26, update the tax codes for your employees as notified to you by HMRC on a P9T or P9X form.