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Year-end guide 2022/2023 for Standard Payroll

SOLVEDby QuickBooksQuickBooks Online31Updated March 29, 2022

Payroll year end is just around the corner (5 April 2022), and we're here to help. Whether it's your first payroll year end or you're a seasoned professional, this article for QuickBooks Standard Payroll will cover everything you need so you can wrap up the tax year and prepare for the next.

If you use Advanced Payroll, click here.

Things to remember

For those eligible, remember to let HMRC know that you're claiming Employment Allowance in 2022/23. Find out if you qualify for EA here.

Year end key dates

  • Tuesday 5 April, 2022 - End of tax year 2021/22
  • Wednesday 6 April, 2022 - Start of new tax year 2022/23
  • Tuesday 19 April, 2022 - Final submission deadline for FPS and EPS of tax year 2022/23
  • Tuesday 31 May, 2022 - Deadline for all employees that are still employed at the end of the tax year to receive their P60 form
  • Wednesday 6 July, 2022 - Deadline for submission of P11d forms to HMRC for tax year 2021/22

Key tax changes and new initiatives

For more information and guidance on rates and thresholds, please visit the  GOV.UK website.

PAYE tax rates and thresholds
Employee personal allowance£242 per week
£1,048 per month
£12,570 per year
Note: No changes from 2021/22 tax year.
English and Northern Irish basic tax rate20% on annual earnings above the PAYE tax threshold and up to £37,700
English and Northern Irish higher tax rate40% on annual earnings from £37,701 to £150,000
English and Northern Irish additional tax rate45% on annual earnings above £150,000
PAYE tax rates and thresholds
Employee personal allowance£242 per week
£1,048 per month
£12,570 per year
Scottish starter tax rate19% on annual earnings above the PAYE tax threshold and up to £2,097
Scottish basic tax rate20% on annual earnings from £2,163 to £13,118
Scottish intermediate tax rate21% on annual earnings from £13,119 to £31,092
Scottish higher tax rate41% on annual earnings from £31,093 to £150,000
Scottish top tax rate46% on annual earnings above £150,000
PAYE tax rates and thresholds
Employee personal allowance£242 per week
£1,048 per month
£12,570 per year
Note: This is subject to change.
Welsh basic tax rate20% on annual earnings above the PAYE tax threshold and up to £37,700
Welsh higher tax rate40% on annual earnings from £37,701 to £150,000
Welsh additional tax rate45% on annual earnings above £150,000
  • Lower Earnings Threshold remains £6,240
  • Earnings Trigger remains at £10,000
  • Upper Earnings Threshold changes to £50,270 from £50,000
  • Statutory Sick Pay (SSP) from £96.35 to £99.35
  • Statutory Maternity Pay (SMP) from £151.97 to £156.66
  • Statutory Paternity Pay (SPP)  from £151.97 to £156.66

SMP changes will be made on Sunday 3 April, 2022 (the Sunday before the start of the new tax year which falls on Wednesday 6 April). For other payment rate changes please see benefit and pension rates.

Plan 1 and Plan 2 Student Loan annual repayment thresholds for 2021/22 are increasing. The Rate of deduction remains at 9%.

  • Plan 1 threshold rises to £19,895 from £20,195
  • Plan 2 threshold remains at £27,295 
  • Plan 4 threshold remains at £25,375

There is no change to the postgraduate threshold (£21,000) or deduction rate (9%). For more guidance please see student loan and postgraduate loan recovery.

For eligible employers the Employment Allowance will increase from £4,000 to £5,000 per annum. If you are eligible, make sure you have specified this in your payroll settings and the EPS will be submitted to inform HMRC.

The Health and Social Care Levy is part of the government's Build Back Better plan to help fund the recovery of the NHS, health and social care from COVID-19.

On 6 April, your National Insurance Contributions may increase by 1.25% when the initiative comes into effect in the UK (England, Scotland, Wales and Northern Ireland).

As an employer, you'll need to include the message "1.25% uplift in NICs fund NHS, health & social care." on your employees' payslips for the 2022/23 tax year – QuickBooks automatically adds this as a note on the payslips for you.

QuickBooks will automatically make the necessary changes. For the 2023/24 tax year, there will be a separate entry on the payslips with NICs returning to normal rates.

Following the Spring Statement on Wednesday 23 March, we will also be implementing the changes to the Primary Threshold from 6 July. The changes will mean that any pay dates 6 July onwards will have the new thresholds applied.

From 6 July, the Primary Threshold (PT) will increase from £9,880 to £12,570 per year. That is £823 per month to £967 per month. Earning subject to NIC's will be 0% up to the PT. Earnings above the PT will be at 13.25% until the Upper earnings Level (UEL) when it will be 3.25%.

For a director it will be annualised which means the Primary Threshold will be £11.908 per year so £992 per month

For the new 2022/23 tax year and onwards, if you're making a claim for CIS suffered (above £0.00) via the EPS, you'll need to include your Corporation Tax (CT) and Unique Taxpayer Reference (UTR). This is part of government measures to reduce CIS abuse.

This government plan focuses on housing, mental health support and employment of ex-military people. To help boost veteran employment, the initiative is allowing up to 12 months relief on Employer National Insurance Contributions (NICs) for new eligible employees.

Read employee eligibility and record keeping for more details.

If you have an eligible employee for the tax year 2022/23 and onwards, all you need to do is select the NI letter V in QuickBooks. Remember to make a note when you change the employee's NI letter.

For any eligible veteran employees in the tax year 2020/21, please contact HMRC to make a claim.

Freeports are government designated zones usually located around shipping ports or airports. Normally located within the country's borders, there are freeports beyond borders for tax purposes.

If you're an employer in any one of the designated freeports, you can benefit from a deduction rate of National Insurance Contributions (NICs) for eligible employees.

For eligible employees, simply select the relevant NI letter in QuickBooks and we'll do the rest.

Not sure which one to choose? Here are the four new NI letters:

  • F - standard category letter
  • I - married women and widows entitled to pay reduced NICs
  • S - employees over the state pension age
  • L - employees who can defer paying 12.5% NICs and pay only 2% because they are already paying contributions in another job

For any letter other than F, you'll need to have support documents in order to select them. Remember to make a note when you need to change the employee letter to the normal NI letter.

Year end checklist

To make sure your year end goes smoothly, we've created this handy checklist:

1. Check if your payroll date ends on week 52 or week 53

If your employees are paid monthly you won't have a week 53, and you can process your payroll as normal. If the final pay date falls on 5 April then your payroll ends on week 53.

Learn more about week 53 for directors and how National Insurance is calculated.

2. Run and submit your final payroll

We'll notify you in QuickBooks that it's your final payroll of the tax year. If this is your first time, this article will show you how to create a pay run.

You can also register to watch a webinar where our experts answer common questions and share essential information about payroll year end.

If you need to go back to a certain point and make changes, there are a few things you need to know before you roll back or delete a pay run which we cover in this article.

Should you need to delete a pay run, you will need to reset your Employment Allowance according to your eligibility for tax year 2022/2023.

To do this, go to  SettingsAccount and Settings > Payroll and then Employer NI & Relief.

3. Submit your final Full Payment Submission (FPS)

Every time you run payroll, you need to submit an FPS to HMRC to show all employee payments and deductions. HMRC uses the FPS to calculate how much PAYE and NIC liability is due from your business each tax month.

To make it easier (and skip a couple of steps every payday), turn on RTI reporting  and QuickBooks will automatically submit an FPS to HMRC each time you run payroll.

Note: QuickBooks will automatically inform HMRC that this is your final payroll of the tax year.

4. Receive submission confirmation email

Once you have submitted your final FPS, you'll receive a confirmation email from HMRC to let you know that your submission has been accepted.

To see a complete breakdown of your submission to HMRC:

  1. Go to Taxes, and then Payroll Tax.
  2. Click the submission and select Review.

5. Give employee payslips

Next, download or email payslips to all your employees on or before their pay date. A payslip is generated for each employee every time you run payroll. This must show an employees' earnings before and after deductions, taxes and other contributions.

To save time on admin you can invite your employees to QuickBooks Workforce, a secure self-service portal where employees can view and download their payslip and P60 form themselves. 

6. Print off P32 report

An Employer Payment Record (P32) report is a summary of the amounts you have paid to HMRC each tax month, and will help you determine if you need to submit an Employer Payment Summary (EPS). This report includes all PAYE, NI contributions and student loans deductions.

7. Give employees their P60 form

Finally, give your employees their P60 forms by Tuesday 31 May, 2022. 

Note: A P60 form is only created for employees who are still in your employment at the end of the tax year.

To save time on admin you can invite your employees to QuickBooks Workforce, a secure self-service portal where employees can view and download their payslip and P60 form from anywhere at any time. 

That's it! You've successfully completed your final payroll for this tax year.

More helpful links

Standard and Advanced Payroll product comparison

Check out this complete list of features for Standard and Advanced Payroll so you can choose which one is best for you and your business.

Standard Payroll hub

From setting up your first payroll to managing employees and running reports, bookmark this page for more helpful articles.

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