The end of tax year is upon us again. Here’s what your HR and payroll teams need to do before, during, and after the transition – along with some key employment changes that come into effect in April.
In this blog
What you need to do before year end
What you need to do before year end
As always, this end of tax year period will be busy with seemingly hundreds of tasks to complete between now and April 5th. In this article we’ll lay out a comprehensive payroll year end checklist so that you can plan what you need to do.
Data verification
Begin by ensuring all your records are accurate.:
- Check employee personal details including names, addresses, and NI numbers and letters
- Verify that tax codes are up to date and correctly applied
- Validate benefits, expenses and deductions (student loans, attachments etc) have been properly recorded and paid
- Repeat for pension contribution calculations and records
- Confirm that all starters and leavers have been processed correctly
Payroll reconciliation
Now your data is correct, ensure that all payment summaries have been reconciled against payroll records:
- Check statutory payments (SSP, SMP, SPP, ShPP, SAP) are correctly recorded.
- Verify NIC calculations, including directors’ NIC if applicable.
- Ensure that salary sacrifice arrangements are also recorded and reconciled.
- Confirm all court orders, CIS and student loan deductions are correct.
Year end processing
Next, complete your year-end payroll processing tasks:
- Final RTI submissions
- Process final payroll run of the tax year
- Submit final FPS (Full Payment Submission) for the year end April 5th
- Submit EPS (Employer Payment Summary) if required.
- Ensure all earlier-year updates are completed
- Check for any rejected submissions and correct errors
P60 processing
With submissions complete, the payroll team can begin work on P60 processing:
- Generate P60s for all employees employed on 5th April
- Review P60s for accuracy before distribution
- Distribute P60s to employees by 31st May 2025
- Archive copies of P60s securely
Benefits and expenses reporting P11D and P11D (b) preparation
The final task relating to tax year 24/25 is to get your P11D reporting completed:
- Gather all benefits in kind information
- Calculate cash equivalent of benefits
- Complete P11D forms for relevant employees
- Prepare P11D(b) to declare Class 1A NICs
- Submit P11D and P11D(b) by 6th July 2025
- Pay Class 1A NICs by 22nd July 2025 (19th if paying by cheque)
It’s worth noting that payroll AI can automate many P11D and P60 activities.
New tax year setup (2025/26)
With 2024/2025 complete, your team can move on to preparing for the next tax year.
System update
Preparing your payroll system for the new tax year is essential to avoid mistakes and miscalculations:
- Update tax codes per HMRC notifications
- Apply new tax year thresholds and rates (this is done automatically for Zellis HCM Cloud customers via legislative upgrades)
- Update National Insurance thresholds (again, HCM Cloud customers can relax – we take care of this for them!)
- Review and update pension contribution rates
- Check student loan thresholds
- Update any salary sacrifice arrangements
Documentation and compliance
Your payroll system is now ready for the next tax year, so attention turns to checking your processes for compliance:
- Archive 2024/25 payroll records
- Update payroll procedures for any new legislation
- Communicate those changes to relevant departments and schedule training where appropriate
- Review payroll software is up to date
- Check new starter/leaver processes
- Review data protection procedures
- Update authorised signatory lists if needed
- Undertake data deletion in line with GDPR regulations and statutory retention periods
You should also use this an opportunity to identify where payroll process automation could deliver new cost savings and efficiencies.
Additional considerations
There are just a few more housekeeping activities to be completed at the end of the tax year…
Audit preparation
Audits are inevitable, so it makes sense to do the necessary preparations early:
- Maintain records of all year-end adjustments
- Document any special circumstances or arrangements
- Keep evidence of calculations for unusual items
- Store backup of year end reports
- File copies of all statutory submissions
Communications
You will also need to notify your colleagues of any relevant payroll and HR changes for 2025:
- Notify employees of any tax code changes
- Inform employees of new tax year changes
- Update payroll calendar for 2025/26
And… take a breath, you’re done. Until the next payroll run.
(On the subject of payroll cycles, it’s worth investigating realtime payroll, which keeps calculations up to date throughout the month.)
HR changes in 2025/26
As always, a new tax year brings a raft of updates and adjustments to employment policy. There are some of the notable HR changes 2025 will bring:
National Insurance rise for employers
Perhaps the most talked-about aspect of the October 2024 Budget Statement was a National Insurance rise for employers. From April 6th, the rate of employer National Insurance increases from 13.8% to 15%. The earnings threshold for employees has also been reduced from £9,100 to £5,000 per year.
Consequently, many organisations will see their NI employer contributions increase as more employees, particularly part-timers. The Treasury has increased the Employment Allowance from £5,000 to £10,500, which will provide some measure of relief for smaller organisations.
National Minimum Wage increases
The cost of living continues to climb, and the National Minimum Wage has been adjusted to accommodate it. Employees aged 21+ will receive a 6.7% increase, taking hourly wages to £12.21. Those aged 18-20 are in line for a 16.3% boost, up to £10 per hour.
New employment bill imminent
The government’s flagship Employment Rights Bill is making its way through Parliament, bringing a raft of significant HR changes. The proposed law is still under debate, but it is likely that employers will need to plan for proposed changes like restrictions on zero-hour contracts, increased entitlement to Statutory Sick Pay and enhanced maternity/paternity rights.
The HR changes 2025 brings are likely to increase the cost of employment. As a result, most organisations will need to seriously assess their hiring strategies we move into the new year.
Conclusion: Best foot forward
As the new tax year approaches, we’re confident the steps outlined in this checklist will help get you over the line. You can easily see what you’ve already completed – and the tasks that are still outstanding. With everything under control, you’ll be ready to put your best foot forward into 2025/26.
Key takeaways
- There’s a lot to get done before April 6th – but this end of tax year checklist will help.
- Your payroll system will require several updates to ensure compliance with employer NI obligations next year.
- HR and payroll face a raft of changes over the coming year – getting administrative tasks in order now will free up time and resources later.
- Improving and automating payroll processes will create new efficiencies that could help to offset increased employer liabilities.
Grab your free tax year end checklist
We’ve prepared a downloadable and printable version with all the steps you need to succeed.
