Preparing for Payroll Year End: What to Do Before 5 April

With roughly six weeks left of the current tax year, now is exactly the right time for employers to start preparing for payroll year end properly, rather than treating it as a task for the final week of March. A bit of structured preparation now makes the actual transition into the new tax year considerably smoother, and reduces the risk of errors carrying forward into new employees' first payslips.

Reviewing Employee Records for Accuracy

Before the year closes, it's worth checking that every employee's records - name, address, date of birth, National Insurance number - are accurate and up to date. Errors in these basic details are one of the most common reasons for discrepancies between your payroll submissions and HMRC's own records, and they're far easier to identify and correct now than after year-end figures have already been submitted and P60s issued.

Checking Tax Codes Are Current

HMRC periodically issues updated tax codes for individual employees, and it's worth confirming that any recent notices have been applied correctly in your payroll software before the year closes, rather than discovering an outdated code has been in use for several months once the year-end reconciliation is done. An employee on the wrong tax code for an extended period can result in either an unexpected underpayment or overpayment of tax that then needs resolving separately with HMRC.

Reconciling Statutory Payments

If any employees have received statutory payments during the year - sick pay, maternity or paternity pay, or other statutory leave payments - it's worth reconciling these now to make sure they've been recorded and processed correctly, rather than leaving any discrepancies to be untangled at the point P60s need to be issued. This is also a good moment to confirm that any relevant HMRC recoverable amounts have been correctly claimed back through your payroll submissions.

Planning for the New Tax Year's Payroll Changes

Every new tax year typically brings updated figures - tax thresholds, National Insurance bands, and statutory payment rates are all reviewed annually and often change from 6 April. It's worth checking that your payroll software provider has confirmed it will apply the correct updated figures automatically from the first pay run of the new tax year, and, if you're aware of any planned changes specific to your business - a pay review, a change in benefits provided, new starters expected around the year end - building those into your planning now rather than reacting to them once the new year has already begun.

Final Payroll Submissions of the Year

The final Full Payment Submission of the tax year carries particular importance, since it needs to be correctly marked as the final submission for the year, and it triggers the point at which year-end figures are locked in for the purposes of generating accurate P60s. Getting this final submission right - rather than treating it as simply another routine monthly submission - avoids complications with your year-end reporting that can be time-consuming to unpick after the fact.

Coordinating With Whoever Handles Your Accounts

If payroll and your annual accounts preparation sit with different people, whether internally or across different advisers, it's worth making sure both are aligned on the year-end figures before either process is finalised. A discrepancy between payroll year-end figures and what's reflected in your annual accounts is far easier to resolve while both are still being actively worked on than after each has been separately signed off and filed.

Giving Yourself Time to Fix Problems

The real value of starting this process six weeks out, rather than in the final days before 5 April, is time. If a discrepancy or error is identified now, there's still a meaningful window to investigate and correct it properly before the year closes. Identifying the same issue in the last few days of March leaves far less room to resolve it calmly, and increases the risk of it simply being carried forward into the new tax year unresolved.

Setting Up for a Smoother Year End Next Time

If payroll year end has historically felt like a rushed, stressful process for your business, use this year's preparation as an opportunity to build a proper checklist you can reuse each year, reducing the process from a source of annual stress to a routine administrative task worked through steadily over several weeks rather than crammed into the final one. If you'd like help getting your payroll properly prepared for year end, or want your current process reviewed, we're happy to help.