Payroll year-end checklist: P60s and P45s for employers

Who owns the year-end checks?

Treat year end as a controlled close, not simply the production of forms. Name the person preparing records, employer approver and owner of each submission. If you use a bureau, confirm its tasks and those remaining with finance or HR.

Use the current GOV.UK annual reporting timetable rather than dates copied from an old checklist. Add internal review and approval dates ahead of statutory requirements. Check final payroll, P60s and expenses or benefits separately because completing one workstream does not close the others.

Where a PAYE scheme has several frequencies, coordinate the final reporting across them. The last monthly payroll is not necessarily the last payroll under the scheme. A year-end plan should show every pay group and its final reporting owner.

Which employee records need a final review?

Confirm starters, leavers, pay changes, absences and statutory payments were processed in the right periods. Check names, NI numbers where available, tax codes, NI categories and pension settings against supporting records. Missing identifiers and stale settings can complicate both reporting and employee documents.

Review unusual items individually, including directors, salary sacrifice, irregular payments and deductions. If your frequency produces an additional year-end pay period, ask the specialist to confirm correct software treatment. Do not force a familiar period number into an unfamiliar calendar.

Use current employer rates and thresholds for the relevant year when checking calculations. This guide deliberately avoids repeating changing figures. Keep a list of exceptions and resolve each against source evidence before the final run is approved.

How do you reconcile payroll and liabilities?

Reconcile cumulative employee figures with control totals and HMRC reports. Compare taxable pay, tax, NI, statutory payments and other relevant balances. Check individual records as well as totals so offsetting errors do not disappear in a scheme-level comparison.

Compare the payroll liability with the HMRC account and payment records, allowing for EPS adjustments and allocation. Investigate differences rather than altering payroll to force a match. Record the explanation, evidence and person responsible for each outstanding item.

Check pension deductions and employer contributions against submissions and amounts paid to the scheme. A successful upload does not prove payment. Resolve rejected member records and missing allocations before closing the reconciliation.

• Match employee year-to-date figures to final payroll reports.
• Check acceptance receipts and unresolved rejections.
• Reconcile PAYE liabilities, EPS adjustments and payment allocation.
• Match pension deductions, submissions and actual receipts.
• Retain approvals and assign remaining exceptions to named owners.

Does the final report belong on an FPS or EPS?

Send the final FPS on or before the relevant payday, following HMRC rules. Where software provides the field, mark the final submission for the year appropriately. Do not confuse that indicator with permanently closing the PAYE scheme.

HMRC specifies circumstances where final information is instead reported through an EPS. These include a missing final indicator, software without the FPS final-submission field and situations where nobody was paid in the final tax month. Follow current guidance for the exact circumstances, rather than assume both reports are always required.

Confirm which report carries final information and retain acceptance evidence. If an error emerges, use the correction procedure appropriate to its type and timing. An accepted final report does not mean an underlying calculation can never need correction; nor should you resend it without checking the route.

Who should receive a P60 or P45?

Provide a P60 to each employee employed by you at the tax-year end. Base it on reconciled records and issue it within the current official deadline. Check electronic documents are securely accessible and resolve failed portal invitations rather than treating document generation as delivery.

A P45 is the leaving document when employment ends. Someone who left before tax-year end does not receive a P60 from you for that employment merely because they appeared on earlier payrolls. Conversely, a P45 is not a substitute for a P60 for a continuing employee.

Keep a record of production and delivery. For corrections, follow the applicable process and retain an audit trail rather than silently replace figures. Explain changes to the employee where needed and make sure the supporting payroll record is consistent.

What remains outside routine payroll year end?

Expenses and benefits need a separate review. Confirm which benefits were payrolled and which reporting obligations remain, including applicable P11D, P11D(b) and Class 1A NI requirements. Do not assume a completed payroll year end settles every benefit obligation.

Our standard service includes processing, secure portal access and statutory pension submissions. Agree separate benefits work explicitly. The employer still approves payroll, pays employees using the supplied file and remains responsible for HMRC and pension payments. A written scope helps prevent an unowned task being discovered near a deadline.

How do you prepare the first new-year run?

Update software and apply relevant tax notices and current statutory settings before processing. Check the pay calendar, pension settings and continuing employees rather than simply copying the previous run. Review who is authorised to approve payroll and access employee documents.

If switching provider, allow our typical two-to-four-week SME planning period for discovery, Form 64-8 authorisation, reconciliation, parallel running and employee logins. Assign old-year corrections clearly. Keep earlier records accessible and agree the first live-submission owner so the transition does not duplicate reporting.