The new tax year starts on the 6th April, as part of the year end process there are a couple of things that need to be considered going into the new tax year along with the deadlines associated.
- Submit your final payroll RTI file for the tax year
- Provide employees with a P60
Final Payroll Submission.
When you have finished processing all of your pay runs for the year you need to notify HMRC. This is done within the RTI files by sending a 'final submission indicator'. When this is submitted HMRC will not expect any further submissions for that tax year and will effectively close the payroll for that year.
The system will automatically populate the final pay run indicator if it is the last period of the tax year e.g month 12 (this can be unticked if required). If for any reason you miss sending this in the full payment summary (FPS) for your final pay run you can manually set this flag within the employment payment summary (EPS) to notify HMRC instead.
NOTE: If you are processing multiple payment frequencies under the same PAYE reference, flag the final pay run in the last FPS you send.
The deadline for the final submission to be filed with HMRC is the 19th April 2021.
When you have processed and finalised the last pay run for the tax year you can then issue P60s to employees (this is only required for employees in employment on the 5th April, employees that have left before this date will have received a P45 instead) guidance for P60s can be found here.
NOTE: If the pay run is automated, and the option to send employee notifications has been selected, then P60s will be published automatically. Further guidance on pay run automation can be found here.
The deadline for P60s to be issued to employees is 31st May 2021. An action item will be created in the dashboard to remind you of this.
New Tax Year 2021/22
Updates applicable for the new tax year. These will be applied automatically unless stated otherwise.
- Tax code uplifts - The new default tax code is 1257L, with 1383M and 1131N where personal allowance has been transferred. These default codes will be uplifted automatically, other codes will need to be uplifted manually.
- Tax thresholds - Increase in basic rate threshold up to £37700, higher rate £50270
- National insurance - % rates remain the same with the Upper Earning Limit increased to £50270
- National Minimum Wage/National Living Wage banding now changed from April 1st, 23+ rate £8.91
- Statutory sick pay increased to £96.35
- Statutory Parental Pay increased to £151.97 applicable from April 4th
- Student loan plan 1 and 2 earnings threshold has increased to £19895 and £27295. Introduction of new Scottish student loan plan 4 with an earnings threshold of £25000
- Postgraduate loan - no change
- Automatic enrolment - Upper earnings threshold increased to £50270
- Employment Allowance - No change. To claim for 2021/22 tax year you must complete the state aid sector in HMRC settings this will not be automatically carried over. Guidance can be found here.
- If you have a director set up in the payroll, at month 12 the system will calculate any National Insurance due based on the earnings for the whole year. This final reassessment is to ensure the correct deductions have been made for the full year.
- When creating a pay run it is the pay date that determines the tax period, so any pay runs with a pay date of the 6th April onwards will be created in the new tax year.
- If you have published the P60s and then process a pay run for the tax year they cover, you will need to re-publish any employee P60s affected.
- If you need to make any changes to the payroll after you have sent the final FPS guidance for this can be found here.