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Year end guide 2020/2021 for Standard Payroll

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 to prepare so you can wrap up the tax year without breaking a sweat.

If you use Advanced Payroll, click here.

Things to remember

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 final FPS and EPS submissions 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

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. 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. Watch this video close off tax year with ease:

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 2020/2021.

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 by Wednesday 31 May, 2021. 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 Wednesday 31 May, 2021. 

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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