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Year end guide 2020/2021 for Advanced Payroll

Payroll year end is just around the corner (6 April 2021 to be exact), and we're here to help. 

Whether it's your first payroll year end or you're a seasoned professional, this article for QuickBooks Advanced Payroll will cover everything you need to prepare so you can wrap up the tax year without breaking a sweat. 

If you use Standard Payroll, click here.

Things to remember

  • When onboarding new employees the default tax code will not change until 6 April, so up until then it will need to be manually added if they are not being paid until tax year 2021/22.
  • For those eligible, remember to let HMRC know that you're claiming Employment Allowance in 2021/22. Find out if you qualify for EA here.
  • Starting from Tuesday 6 April, Advanced Payroll will support payrolling benefits. Register on HMRC's website before Monday 5 April to use this service.

Year end key dates

  • Monday 5 April, 2021 - End of tax year 2020/2021
  • Tuesday 6 April, 2021 - Start of new tax year 2021/2022
  • Monday 19 April, 2021 - Deadline for the final FPS submission of 2020/21 tax year
  • Monday 31 May, 2021 - Deadline for all employees to receive their P60 form

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

PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance £242 per week
£1,048 per month
£12,570 per yearNote: This is subject to change.
English and Northern Irish basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
English and Northern Irish higher tax rate 40% on annual earnings from £37,701 to £150,000
English and Northern Irish additional tax rate 45% on annual earnings above £150,000
PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance £242 per week
£1,048 per month
£12,570 per yearNote: This is subject to change.
Scottish starter tax rate 19% on annual earnings above the PAYE tax threshold and up to £2,097
Scottish basic tax rate 20% on annual earnings from £2,098 to £12,726
Scottish intermediate tax rate 21% on annual earnings from £12,727 to £31,092
Scottish higher tax rate 41% on annual earnings from £31,093 to £150,000
Scottish top tax rate 46% on annual earnings above £150,000
PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance £242 per week
£1,048 per month
£12,570 per yearNote: This is subject to change.
Welsh basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
Welsh higher tax rate 40% on annual earnings from £37,701 to £150,000
Welsh additional tax rate 45% 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 £95.85 to £96.35
  • Statutory Maternity Pay (SMP) from £151.20 to £151.97
  • Statutory Paternity Pay (SPP)  from £151.20 to £151.97
  • Statutory Adoption Pay (SAP) from £151.20 to £151.97
  • Statutory Shared Parental Pay (ShPP) from £151.20 to £151.97
  • Statutory Shared Bereavement Pay (SPBP) from £121.95 to £122.55

SMP changes will be made on Monday 4 April, 2021 (the Sunday before the start of the new tax year which falls on Tuesday 6 April). For other payment rate changes please see benefit and pension rates 2021 to 2022. 

Plan 1 and Plan 2 Student Loan annual repayment thresholds for 2020/21 are increasing. The Rate of deduction remains at 9%.

  • Plan 1 threshold rises to £19,895 from £19,390
  • Plan 2 threshold rises to £27,295 from £26,575
  • Plan 4 threshold is £25,000 (new for 2021/22)

There is no change to the postgraduate threshold (£21,000) or deduction rate (9%). For full loan recovery information (including Plan 4 which has a starting annual threshold of £25,000), please sestudent loan and postgraduate loan recovery.

Year end checklist

To help you get started and mark 'make year-end checklist' off your to do list, we've gone ahead and made one for you.

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. Process employee leavers

You'll need to process your leavers ahead of your year-end submission. To do this, mark their last working day into QuickBooks. Here's how you can terminate an employee. This needs to be done before you can move on to step 4.

3. Run year end payroll

Time to process payroll. To complete your final payroll of 2020/2021, you can watch this video:

Or you can follow these steps:

  1. In Advanced Payroll, select New pay run.
  2. Once the data has been entered and validated, select Finalise pay run.
  3. On the next screen select the date you pay your employees.
  4. Choose whether to submit your pay run FPS to HMRC now, or at a later date. QuickBooks will show you that this is your final pay run of the tax year. To check if the final pay run box is ticked, select the pencil/edit icon.
  5. Select This is the final pay run for the tax year.

If you choose to submit your FPS at a later date, follow these steps on or before April 19 2021:

  1. In Advanced Payroll, select Pay Runs.
  2. Select the desired pay run.
  3. Select Submit to HMRC.
If you need to go back to a certain point and make changes, you can unlock a pay run to edit, re-run or delete a payroll in QuickBooks.

4. Submit your final Full Payment Submission (FPS)

Next, it's time to submit your final FPS. This must be submitted just before your final pay period. And if required, submit your final Employer Payment Summary (EPS).

5. Give employee payslips P60 forms

Finally, create and provide your employees with their P60 forms by Wednesday 31 May, 2021. 

A P60 form summarises an employee's pay and deductions for the entire year. You'll need to create and give these to your employees after you run your final payroll.

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. 

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.

Advanced 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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