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Payroll Year-End Checklist: The Most Wonderful Time of the Year

By 19 March 2021 April 16th, 2021 No Comments

Sage have been hard at work on the 2020/21 year end software update for Sage 50cloud Payroll. The latest update (v27.01) contains some new features and improvements as well as all relevant legislation for the 2021/22 tax year. Use our handy guide below to make sure you’ve done everything you need to for a successful year-end.

 

The first thing you need to do is make sure Sage 50cloud Payroll is updated to v27.01. If you haven’t already, we also recommend updating your Sage 50Cloud Accounts too. This ensures both products are in-line with each other, and both are utilising the most up-to-date features. Please get in touch with us to organise this update, or if you have any queries about it. Once you’ve installed the update, you can get started with processing year end.

 

Once you’re on the latest version, you’ll need to process your last payment run of the tax year. If you pay your staff on a weekly basis, you may have an extra pay run on Monday 5th April (known as ‘week 53’). If you pay your staff monthly, you won’t have to worry about this.

Leavers: Don’t forget to make sure you process any employees that left on, or before 5th April 2021.

Send your full payment submission (FPS), and employment payment summary (EPS) if necessary, as you normally would, on or before the date your employees receive their pay. Remember, this must be done no later than 19th April 2021. If the HMRC gateway is busy when you submit these, it might take a while longer than expected. You can always leave it running or click ‘Check again later’.

The new update (v27.01) contains a template for printing P60’s onto paper, or you can customise your own (we can also help with this if you’d prefer). If you’re using the Online Payslips/P60 service with Sage, this will work as normal. P60’s must be distributed to your employees by 31st May 2021. (Anyone who left the company on or before 4th April 2021 doesn’t need one though.)

And finally, once you’ve completed the year end in Sage 50cloud Payroll, don’t forget to back up your data. We always recommend backing up your data at least once a week, or before any major changes/updates to your data, like year-end.

 

Once you’re happy that you’ve done all of the above, you’re done with 2020/21 year end and can start to process the new tax year. The recent update (v27.01) saw all relevant legislation updated in Sage’s Payroll software to make it easy for you to get the new tax year off to a good start. See below for how these changes may affect your business.

 

For the 2021/22 tax year, the personal allowance limit has increased from £12,500 to £12,570. This means the emergency tax code for 2021/22 is now 1257L.

  • Tax codes ending in L are now increased by seven.
  • Tax codes ending in M are now increased by eight.
  • Tax codes ending in N are now increased by six.

 

As of the 2021/22 tax year, you’ll need to apply to claim employment allowance at the start of the tax If you’re eligible to claim employment allowance, you can easily notify HMRC that you’re claiming the employment allowance and keep track of how much you’ve claimed.

 

Depending on your NI liability, your company may qualify for small employer’s relief. This only applies if it was £45,000 or less in the last complete tax year prior to the employee’s qualifying week, or in the case of adoption, the matching week.

 

From April 2021 the employment allowance allows eligible employers to reduce their annual National Insurance liability by up to £4,000.

 

Year end can be a stressful time for business owners and accountants, so using the above checklist will make the process run a lot smoother. We’ll let you know any other changes that may happen, but if you have any questions in the meantime, we’re always here for you.

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