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Xero Payroll helps you get ready for payroll year end in the UK

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Payroll year end can be stressful when you’re balancing deadlines with normal business tasks and activities.

To ensure you meet your payroll year end tasks, we’ve released updates to Xero Payroll including:

  • Download your employee P60s and/or email them as an email attachment directly to employees
  • P11 report is now available
  • Automatically updating employees on the 1060L tax code to 1100L for the new payroll year
  • Support for Scottish Tax Codes
  • Update to the Employment Allowance to £3000 for the 2016/2017 year
  • Automatically indicating the final year report to HMRC via RTI

See more release information here and read below.

Join us for a free webinar in which we’ll take you through a range of tips to streamline your payroll year end processing in Xero. This will include account reconciliation, P60, P11 and more. They are free for everyone. You can also access the Essential Checks: Payroll Year End video series in Xero U to take you through an end of year payroll review.

Payroll year end checklist

As an employer running payroll, there are several things you need to do. Things like, reporting to HMRC on the previous tax year (which ends on 5 April), giving your employees a P60, and preparing for the new tax year, which starts on 6 April.

What you need to do When 
Check opening balances entered correctly Now
Send your last FPS of the year On or before your employees’ payday
Update employee payroll records Before 6 April
Give your employees a P60 By 31 May

 

Opening Balances
If you switched to Xero Payroll from a different payroll software provider after the start of the year, you should have entered opening balances to ensure you claimed the correct amounts from HMRC throughout the tax year.  To check whether you entered opening balances follow the instructions here.

If you did not enter opening balances and switched from another payroll provider after the start of the payroll year please watch this video before proceeding.

Send your final submission notification to HMRC
We will streamline final payroll reporting requirements for the year by automatically indicating on the EPS that we will be sending on the 12th April that it is the final report for the 2015/2016 payroll year.

Update employee payroll records
You’ll need to update your employee payroll records with any changes to tax codes, benefits, deductions or reimbursements. You should do this before you run the first pay run in the new year to avoid having any ongoing issues that would later need correcting. We will automatically update employees on the 1060L tax code to 1100L at the start of the new tax year. For any other tax code changes these will need to be manually updated. Including changing any employees who were on a non-cumulative code in the last period of 2015/16 to be cumulative for the start of 2016/17.

Payroll software updates
Xero Payroll takes care of all the updates for you including support for the Scottish Rate of Income Tax. If you have any employees who are Scottish taxpayers you will get a letter from HMRC with an updated Tax Code for them. You will need to manually change this in Xero.

Review employees P11s
As part of the year end routine you must review your employees’ pay to make sure their values and the information you submit are correct. You can do this using the P11 reports. You don’t submit these reports to HMRC, however, you must keep them for at least three years.

Give your employees their P60
You must give your employees a P60 before 31st May. With Xero Payroll you can download employee P60s and/or email them directly to employees as an email attachment

There is no better time of year to seek advice from a payroll professional or trusted advisor. Find a certified Xero advisor to help your business start the new payroll year off on the right foot.

7 comments

Jane Stanley
April 7, 2016 at 12.00 am

It doesn’t appear that the tax codes and employment allowance are updated automatically as stated here…

Oliver Furniss in reply to Jane Stanley
April 7, 2016 at 1.05 am

@Jane, the tax codes (1060L changing to 1100L) will update automatically in the first posted pay run dated after 6th April or after.

The employment allowance for 2016/2017 should now be showing as £3000 under the Allowances section in Payroll Settings > Opening Balances. Change the year dropdown to show 2016/17 to show the £3000 amount.

Karen Dowds in reply to Oliver Furniss
April 18, 2016 at 11.11 pm

Should this change to £3000 automatically? I had to change manually. I also note that the tax codes have not updated. This is my first year end in Xero, so am slightly confused. As per Jane Stanely, I also assumed that the tax codes updated automatically which mine have not. Are you now saying that you should open the April payrol and then just go in an manually make what changes have to be made. Xero really do need a helpdesk with a voice at the end of a phone.

Tracey
April 8, 2016 at 1.11 am

I also checked my employees 1060L tax codes and noted that they had not changed to 1100L. To say that they will update automatically in the first posted pay run after the 6th April does not give me confidence that it will happen.

When I process a pay run, there is nowhere for me to check if the code has changed before posting.

Karen Dowds
April 18, 2016 at 11.23 pm

Hi Tracy

Did you run your payrol. This is my first tax year in Xero and I am slightly confused by the term “will update automatically”, as like yours, mine are all showing last years tax codes

thanx

Regards

Karen

Jessica
April 26, 2016 at 2.19 am

My tax codes haven’t automatically updated either!!

Khushi Irani
May 12, 2016 at 11.26 am

@Karen, Jessica, Tracey

Tax code 1060L will update to 1100L when a Pay Run has been posted with a payment date in the new tax year i.e. on or after April 6, 2016. You will then see the new tax code (1100L) reflected on the Employees > Taxes tab. Please note we have to post a pay run to see the tax code updated.

We are however, working on a fix right now that will truly automatically update tax codes from 1060L to 1100L without requiring users to post a pay run with payment date in the new tax year. But in the interim, the above scenario should still work.

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