RTI: end of the first full tax year

This is the first end of an entire tax year under real-time information (RTI) for most employers.

HMRC say completion should be a lot simpler than before. First of all, many of the pre-year-end validation checks, such as ensuring that everyone has a valid National Insurance (NI) number and a date of birth (within range) on file, will have already been taken care of during the year when a full payment submission (FPS) was sent to the Revenue.

It is worth checking that employees are on the correct NI category letter.

Category X is for where there is no NI liability for primary or secondary contributions. It is used to pay a retirement pension to a pensioner or for an employee is under age 16.

The category should also be used where a worker earns below the lower earnings limit throughout the tax year.

The deadline for the FPS is on or before payday – unless there were fewer than 50 employees on the payroll during 2013/14; in which case, the FPS must be submitted by the last payday in the tax month: the 5th.

This easement is extended until April 2016 for micro employers:  those with up to nine on the payroll.

To finalise the tax year (HMRC now avoid using the phrase tax year-end) the employer must:

• identify and indicate its final FPS or employer payment summary (EPS); and
• answer the questions that previously appeared on the front of the P35.

The payroll software provider will advise whether the final submission must be on FPS or EPS. Multiple payrolls set up under the same PAYE reference number can be finalised only when every FPS has been made and accepted by the taxman.

Employers have until 19th April to submit their final FPS and EPS for the tax year.

Adjustments after the year has closed must be made using the earlier year update (EYU) facility, which will be available from 20 April. Tthere will be no penalties providing employers make adjustments by 19 May.

HMRC provide a checklist on their website.

The EPS and EYU are available after the tax year has closed, for adjustments for up to six years. Adjustments to PAYE payments must be done on the EPS.

Note that year-end ought to be submitted using the employer’s payroll software or basic PAYE tools where there are nine or fewer on the payroll. It cannot be submitted via PAYE online.

Linda Pullan is head of Payroll Alliance: 020 8662 2050; linda.pullan@lexisnexis.co.uk