Sage Blog

Who would have thought after my first Payroll Year End some 14 years ago when I joined Sage with a 32 inch waist, perfect 20/20 vision and a full head of thick wavy hair I would be coming up to my 15^th Payroll Year End. Some might say my waist has increased an inch for each year I have been at Sage.

When I was asked to write a blog about Payroll Year End, I pondered and asked myself what has kept me interested in working all these years with our payroll software and after a little deliberation, the answer was simple….a real passion in doing what is right for our customers and keeping it simple.

However, less about me and more about giving you my top 3 tips for preparing for Payroll Year End.

Payroll Year End veteran Neilson Watts

Tip 1 – Check that you are using the right version of your software

It’s important that you’re using the correct version of the software for the 2010/2011 tax year to ensure that you have been processing using the right legislation and will be able to submit your returns electronically to HMRC.

For users of Sage Instant Payroll or Sage 50 Payroll software:

Sage Instant Payroll: Open Tools and My Instant Payroll

• Sage Instant Payroll v12.00
• Sage Instant Payroll v11.12

Sage 50 Payroll: Open Help menu and choose About

• Sage 50 Payroll 2011, v17.00, v17.01
• Sage 50 Payroll 2010 v16.01, v16.03, v16.04
• Sage 50 Payroll 2009 v15.04, v15.06, v15.07
• Sage 50 Payroll 2008 v14.07, v14.09, v14.10
• Sage 50 Payroll 2007 v13.10, v13.12, v13.13
• Sage Payroll v12.13, v12.15, v12.16
• Sage Payroll v11.16, v11.18

If you’re not using any of these versions, please email us at support@sage.com or call us on 0845 111 5555, telling us which version you’re using. If you can include your Sage serial or account number in the subject line of your email, or have it to hand if you call that really helps.

Tip 2 – Know what support is available from your Payroll solution provider

From March through to May all employers in the UK registered through a PAYE scheme will be working through their payroll year end returns to get them to the HMRC prior to 19^th May deadline as well as getting ready to start their new tax year.

Not only is it a busy time for you, it’s also a busy time for your payroll solution providers, so we would recommend that you check what support is available to you during this busy period.

At Sage we’ve prepared the following useful information and guides for you:

• Payroll Year End guide: A step-by-step guide that walks you through each process you need to undertake your Payroll Year End procedures.

• Payroll year end website: Our dedicated website contains information about how to prepare, process, reconcile and submit year end returns. There are also useful downloads, information about the status of the HMRC Gateway, the length of our telephone queue, and more.
• Ask Sage: Our Ask Sage online database contains over 1800 Sage 50 Payroll and 250 Sage Instant Payroll related questions and answers, including any known issues. You can access Ask Sage from www.sage.co.uk/pye or by visiting www.sage.co.uk/ask and enter your query into the Search text box then click Search.
• Email support: If you can’t find the answer to your query via Ask Sage, you can email us at support@sage.com. We aim to respond to all email queries within two working days. Please remember to include your Sage serial number or account number in the Subject line of your email.
• Telephone support – From Monday 28 March to Friday 27 May, we are extending our payroll technical support and customer service opening hours. During this period, you can call us on 0845 111 5555 from 8am to 6pm. And don’t forget to have your Sage 50 Payroll or Sage Instant Payroll serial number ready, as you may need to quote this when you call.

Tip 3 – Give yourself plenty of time and peace and quiet to run your Payroll Year End

Being a typical male, ordinarily I would leave everything to the last minute, but failing to prepare, you are almost certain to fail. This is probably the most important bit of advice I can offer (déjà vu with some Baz Luhrmann lyrics).

I have the concentration of a three year old, and use any interruption as an excuse not to do something I am not looking forward to, but seriously Payroll Year End is quite straightforward you just need to give yourself plenty of time and ensure where possible you remain uninterrupted.    My advice would be to block out your calendar, close down your email, take the phone of the hook and focus on getting those returns submitted with plenty of time spare.

Also remember this year is the first year HMRC have removed the statutory concession that used to allow employers to file up to 7 days after 19^th May without incurring a penalty.

Nielson Watts, Payroll Year End Veteran

Although there are a whole three months and then some for payroll departments to get their data to HMRC it always seems to arrive with alarming speed.

So what can be done to try to make sure it all goes smoothly whether it’s your first or 21st year end? Here’s some advice from our Sage HR & Payroll team.

Payroll annual update

• Find out from your payroll software supplier when, and what, is going to be released as part of their new tax year update. Our Sage HR & Payroll run a series of Payroll End of Year Seminars for their customers to ensure things go smoothly and all system enhancements and new functionality is covered. If you have the opportunity to attend anything like this we would recommend you do so. If you’re using something like Sage 50 Payroll or Sage Instant Payroll then you can keep up to date on our Payroll Year End microsite.
• Develop a set of generic test scripts for the things that you’ll need to test every year such as statutory payment rate changes (watch out for Small Employer Relief that is dropping to 103% from 104.5% for 2011/12) and tax code uplifts. It will certainly save you time in the long run and will also allow you to consider what test data you need to create to put the system through its paces.
• Update any user-defined parameters such as pay period end dates and pay days and any exception limits built into standard error reports such as those flagging that net pay has exceeded a trigger amount.

Plan now for 19 May

• Liaise internally to agree the timetable to meet the 19 May submission deadline for the P14s and P35. And remember, it is the 19 May for the first time this year. The Extra Statutory Concession that used to allow employers to file up to seven days after 19 May without incurring a penalty has been abolished.
• Depending upon the type of industry you’re in you will also need to schedule one or more supplementary payroll runs after month 12/week 52 to capture all those late adjustments that need to be reflected in the P14s and P35.

Creating the new tax year records

• Create the records for the new tax year. Depending upon the size of your payroll the cleardown and set up routine may need to run overnight. When it does it should clear down:

Statutory year to date figures:

• tax
• National Insurance contributions (NICs)
• student loans (but a marker that a loan is in force must not be deleted but must be carried forward)
• previous pay and tax for new starters during the previous tax year
• approved payroll-giving donations, and
• Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP) or Statutory Adoption Pay (SAP) paid.
• But ensure that the following statutory balances are carried forward to the new tax year:
• Statutory sick pay (SSP) weeks paid this absence, as these link up over consecutive tax years
• Keeping in Touch (KIT) days taken
• court order balances and deductions
• loan balances, and
• debts and salary advances.

And finally employer balances but not any periodic deductions, for example:

• Share Incentive Plan (SIP) deductions
• union subscriptions
• catering allowances
• medical and dental insurance
• company car allowances
• travel grants, and
• relocation or mortgage assistance

New tax codes

• HMRC will also advise you to take certain steps to get tax codes into shape for 2011/12. All the personal allowances are being uprated this year so suffix codes ending with an L, P and Y will all be uplifted by the issue to employers of a P9X instruction – there’ll no doubt be a routine to run against your employee data to effect the changes.
• Employees with D and T suffix codes and K prefix codes will have their codes changed via an individual P9(T) instruction if HMRC wants to amend their code for 2011/12.
• Remember this year there will be a lot more code changes than in previous years as HMRC have been reconciling tax years 2007/08, 2008/09 and 2009/10 and underpayments of less than £2000 will be coded out in tax year 2011/12. Some 17m codes will be issued before 6 April, and given the amount of prior year work that has gone on, employees must check their copy of the tax code (Form P2) that provides the code breakdown that is not visible to the employer. Do ensure if you have any P6 tax code instructions outstanding for 2010/11 that these are input on the employee’s records before any 2011/12 code changes are applied.   Finally ensure any week 1/month 1 markers are not brought forward as you set up the new tax year records.

Record keeping

• Bear in mind that whilst the PAYE regulations only require you to hold three tax years of data plus the current year, HMRC’s new compliance powers allow them to go back four years to assess if a compliance failure they have identified has occurred throughout that period, and six years if they discover a careless error.
• However do be ruthless, storing excessive employee data will breach the Data Protection Act, so it’s all about balance and risk.

Sage HR and Payroll team

The end of the tax year is a busy period for all employers and we constantly work to improve our payroll software and the support service, SageCover, we provide to make this time of year as simple and as painless as possible for our customers. One of the key things an employer needed to do was to send their payroll information to HM Revenue & Customs (HMRC), by the 18^th May.

Gary Ging, Sage Payroll Team (enjoying a Newcastle summer)

Online filing

This used to be a laborious task of having to produce two copies of the P14 form for every employee who worked for you during the year and the P35, which summarises all of the information on the P14s. This was all mailed in the post to HMRC (at the employer’s cost) or you went to your local tax office to deliver it personally. And don’t forget that you also have to give a P60, on paper, to all of your employees still employed by you at the end of the year.

The introduction of online filing has changed the way in which employers can send this information to HMRC and this year was the first year in which all employers, with a few exceptions, were required to submit their year end information online. Not only is this much easier than printing lots of paper work (it’s now just a couple of mouse clicks) but it gives you an immediate response from HMRC to tell you that they have received the information and if everything was ok or not.

How did we do?

We recently received our annual Vendor Report from HMRC detailing how our payroll products performed over the 2009/10 on-line filing period and we were once again very happy with the figures – 436,104 successful employer submissions for a total of 7,218,432 P14s.

Since the introduction of on-line filing we have always exceeded the previous year figures but the most pleasing aspect of the latest report is that it’s not just about the quantity of submissions but also the quality.

The Vendor Report doesn’t just tell us how many successful submissions were made using Sage Payroll software but also how many were unsuccessful, and this year there were 661. No, that isn’t a typo – out of 436,765 submission attempts there were only 661 failures.

This gives us a 99.85% success rate, which I think is pretty phenomenal considering the number of submissions made. And whilst 661 submission attempts were unsuccessful, this does not mean that 661 employers who use our products were not able to submit at all – our submission data shows that these employers did make a successful submission after correcting the original problem.

And I don’t refer to the number of failed submissions as ‘only 661’. We believe that this number is too high and so we have already set ourselves a target of improving these numbers for next year – not only on the number of submissions but we’re going for a 100% first time success rate.

On a final note, HMRC have changed their regulations and so from the 2010/11 year end it will be possible to give your employees their P60 electronically. Within Sage Payroll this will mean that you can either continue to print them on paper or email them directly to your employees, complete with password protection.

Gary Ging, Sage Payroll Team

It’s Payroll Year End and it seems to come round faster every year.  This is my 7th year end now working in the Sage Technical Support team supporting our SageCover customers, and apart from Internet submissions not a lot else has changed.  I thought it might be nice to let you hear about Payroll Year End from my point of view.

Andrew Redhead, Sage Payroll Support Team

For those of you that don’t know, Payroll Year End is an annual event where everyone who processes payroll has to send their P35 and P14 reports to the HMRC to show what they have deducted from all employees over the previous year.  All reports have to be received by the 19th of May or they will kindly send you a fine for every day it is late.

Days at Payroll Year End are much like any other except they start earlier, end later and are very busy.  Due to the longer opening hours we have people in the office from 8 in the morning till 7 at night to answer calls.  It’s very intensive, and I need a high level of concentration to make sure we support our customers to the high standards they expect and deserve.

Calls from our customers can range from an installation of the new version to make sure they are all ready for the new year or a problem with a P35 not balancing and needing to find out why.  We will also receive calls about the more standard issues for payroll like statutory maternity pay and holidays.

Throughout the day there are various things Sage do to make it go as smoothly as possible.  If we work half lunches we get a free sandwich delivered to our desk.  There is chocolate passed around to keep our energy up and the coffee machine is free for part of the day.  They may sound like little things but they all add up to make the day go smoother.

With a job based on the phone though the biggest thing that effects your day is the customers you speak to.  It’s a stressful time of year for our Sage Payroll customers and you’d expect some of them to be frustrated and annoyed, they are however not.  They are very nice to speak to and although they may mention how busy we are they seem to understand why we are so busy.  Depending on the type of call there may be time to talk about things outside of payroll.  This is always a nice change of pace and can make the day go much quicker.  On other calls there is no time for conversation so it’s just a case of entering the notes then onto the next customer.

At the end of the day it’s a case of finishing the call you are currently on before you go home.  It might be time to go home, but it’s not a matter of passing the call to colleague to finish it or ringing the customer back the next day; what matters is taking the time to help the customer no matter how long it takes.  Once you’re done and it’s off home to relax and enjoy the evening before getting up to do it all again.

For our customers I’d say don’t worry if things aren’t going smoothly for you. The important thing about Payroll Year End is to just not let it get on top of you.  Yes you’re busy, yes it can get stressful, but if you do have a problem there is someone like me at the end of the phone to help you.

Useful links:

• Visit our Payroll Year End website for updates and information
• You can find P60s, Payroll Year End training and Payroll software at the Sage Store

Andrew Redhead, Payroll Software Support Team