How to Master Year-End Payroll During Covid-19
With the end of the year approaching payroll quickly, your company needs to find clarity in the chaos to meet its reporting requirements. Here are the details you will need.
Regardless, the HMRC deadlines are the same as always and organizations are expected to record P11Ds, record benefits and expenses, meet the timing of your final payroll, and of course pay tax liabilities.
Steven Watmore, Payroll Product Manager at Sage UK & Ireland, says companies should act now. He recommends creating a checklist of responsibilities and getting the tasks done as early as possible.
He says, “First, consider the practical changes that can affect your deadlines. Check to see if you have week 53, an extra pay period that you left out. If you have weekly billing and work on a Sunday, it is really worth taking a look.
“Are there any tasks that you would normally only work on personally with your employees? If you usually work in an office, you can use cloud technology and digital solutions to solve the problem.
He continued, “This can range from distributing P60s to collecting data you need for your final year-end payroll such as overtime and expenses.”
In general, the best advice is prepared and do not leave anything until the last minute. Watmore recommends covering the basics, such as: B. Ensure that you have access to tax codes well in advance of the April 6 deadline for the start of the new payroll for tax years.
The same applies to simple, practical measures. A constant source of frustration is just preparing your information so that you’ve forgotten the HMRC login details. So register early to settle problems later.
Don’t wait until the end of the year because at that time the HMRC staff are just as busy as everyone else and you may not be able to resolve problems as quickly as you need to.
Year-end payroll changes due to Covid
The pandemic has resulted in some changes to normal operations, both in terms of procedures and possibly the shape of your business.
For example, it is possible that more people have left, joined or even rejoined your company in the last 12 months than in a “normal” year. You need to carefully consider these and clarify details for the HMRC.
Also keep in mind that the tax authorities will not be supplying P60 stationery this year. So it’s a good idea to move to a digital solution if you haven’t already. Software providers like Sage have a number of services that offer documents online to save you the hassle.
Sage’s Watmore has further advice: “Review your reports to see what payments have been made to employees for work they have done, as well as for work that falls under the vacation program.
“Prepare yourself because there may be questions from employees about the pay year of the values they are receiving, especially if their wages have come down that year.
“You need to schedule the reconciliation of your HMRC payments, make sure you keep a record of exactly what you paid and applied for, and verify that you have paid your taxes and social security, and that your bills are up to date.
“If social security has been adjusted, for claims under the Job Retention Scheme or against your unemployment benefit, take this into account when you review your numbers.”
Sage clears up the confusion with free information on Sage.com. This includes everything you need to know about changes due to the coronavirus pandemic, but also a Brexit hub and guides on other areas such as Open Banking and Making Tax Digital.
The support centers are designed for clarity and ease of use, and provide a range of tools to assist businesses in need.
Sage also caters to its customers’ needs with extended phone support, including weekend availability. Live Q&A where users can listen to useful advice; and webinars, videos, and written guides.
Changes in the law to watch out for
Fortunately, the government has made limited legislative changes that affect payroll professionals. However, according to Watmore, there are still some improvements to consider.
He says: “There is a new Scottish student loan like we already have and it will still be on an HMRC form, but the interest rates for people employed in Scotland are slightly different.
“IR35 is a big issue when it comes to work outside of payroll. This is mainly true for larger companies with contractors on their payroll. However, you may be affected if you are also a contractor business.
“The end-of-year payroll process itself has changed: The Early Year Update (EYU) is no longer used to correct submissions to HMRC that you make after April 19th.
“It is being replaced with an updated Full Payment Submission (FPS). However, this has been optional for two years anyway, so for many people it won’t change and your payroll software should take care of it.
“One important change concerns the national minimum wage this year. As usual, the wage increases slightly, but above all the age groups have changed. “
While people between the ages of 21 and 24 were previously in the second wage bracket, this year people aged 23 and over will move up to the top group. This could have an impact on costs. So it’s worth checking prices to understand how your business has been affected.
And while many of the details of the upcoming March 3rd budget declaration are a closely guarded secret, it is important to understand what the various announcements could mean for you.
The upcoming year
Changes seem to be the only consistent one at the moment. Therefore, it is important that your payroll software is not only up to date but also adaptable to future strangers.
For example, the vacation program is set to end in April, but it has already been extended and it could happen again. Model for employees returning to work, but also for changing work patterns.
Will your employees continue to work remotely? If so, how does this affect the way information is exchanged between the company and its employees? This and other factors could come into play.
According to Watmore, the key message in general is to remain vigilant, do your best to understand the turbulent business environment, and prepare early. “
He adds, “Look at what you might need to change about your processes and how you can use software to make life in 2021 much easier and more adaptable.
“Around 50% of private sector workers in the UK are paid with Sage software. So when it comes to year-end payroll we know our way around and are here to help. Learn more at Sage.com. “
This article was sponsored by Sage, the world leader in technology that enables small and medium-sized businesses to perform at their best