The end of the 2020/21 tax year is weeks away and as usual HMRC has made tweaks to its PAYE procedures. As an employer what do you need to know?
Same again. The good news is that the general year-end PAYE procedures remain the same. However, as some employers struggle with these HMRC has published a reminder to employers of what they must do within the time limits allowed (see The next step ).
FPSs and EPSs. Your last full payment submission (FPS) or employer payment summary (EPS) for 2020/21, which covers paydays up to and including 5 April 2021, must include an indicator that you’re making the final PAYE submission for the tax year. If you don’t do this HMRC may harangue you with reminders and estimated demands. Tip. If your payroll software doesn’t allow a final pay indicator in an FPS, you should send your last FPS followed by an EPS with the last payment indicator ticked. You can also send an EPS with the indicator ticked if you aren’t going to pay anyone before 6 April 2021 and your last FPS didn’t indicate that it was the final one for 2020/21. You have until 19 April 2021 to do this, so don’t worry about the automatic reminder that will be sent by HMRC using its generic notification service.
Changes for amendments. The earlier year update (EYU) process for amending payroll reports has changed. From April 2021 an EYU isn’t valid for amendments to your payroll for 2020/21. Instead, you must make amendments using a further FPS showing the correct year-to-date figures. However, if you need to amend payroll information for years up to and including 2017/18 you should use an EYU, and for 2018/19 and 2019/20 an EYU or FPS is acceptable.
The new year. HMRC is aiming to issue notices of new tax codes you use for paydays on or after 6 April 2021 around 19 March. But if you want to get ahead of the game HMRC is issuing all notices by email by the end of February. You can view these via your PAYE online account.
Your year-end full payment submission (FPS) for your last payday of 2020/21 must have the last payment indicator ticked. If you forget, send a last employer payment summary by 19 April 2021. If you need to amend your 2020/21 figures use an FPS; earlier year updates are no longer valid.
The next step
HMRC’s PAYE end-of-year guidance
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