End of tax year – important points to note
The end of the tax year is fast approaching. If you are paying your PA in the next few days, you will need to remember to put ‘Yes’ in the ‘Final submission for year’ field in your payroll software and think about how to communicate any week 53 issue there may be.
Usually you tell HMRC it is your final submission of the year in your Full Payment Submission (FPS) however sometimes, depending on the circumstances, you will do this in your Employer Payment Summary (EPS) (for example, where you did not pay anyone in the final pay period of the tax year).
For more commentary on making your final submission, see the GOV.UK guidance.
Users of HMRC’s Basic PAYE Tools (BPT) should check the user guide which contains step by step help on the most common functions of BPT, including how to make final submissions for the tax year.
HMRC are also running a webinar on the 8th and 17th of April 2019, designed for employers who use the Basic PAYE Tools. The webinar covers end-of-year tasks, the P60 form, sending the last FPS to HMRC, and preparing for the new tax year.
Employers using other software may also find the webinar useful, as the processes are similar regardless of the system used.
You can find further information about end of year processes on our website.
One important point to note about the last day of the 2018/19 tax year (flagged in our end of year process guidance linked to above), is that it lands on a Friday and that in the 2018/19 tax year, there are 53 Fridays, rather than 52.
If you pay your PA on Friday 5th April then they are likely to encounter a ‘week 53’ issue’, whereby even though they will already have been given all their tax-free personal allowances through the payroll, HMRC will allow you to give them an extra proportion of personal allowance, so that their take home pay is not adversely affected.
This means that over the tax year, they will receive more tax free pay than the standard personal allowance for the year (£228 in fact). At a later date, HMRC will then take steps to recover the tax underpaid as a result of the extra personal allowance given to them. This will probably be around £45.60 (that is £228 @ 20%).
When this happens, employees often complain to HMRC and the employer is accused of failing to operate PAYE correctly even though they have deducted tax in accordance with the PAYE regulations.
HMRC are working to come up with a solution to this long standing problem. In the meantime, it may be helpful if you explain the situation to your employee.