As we approach the 2025/26 tax year, it’s a good idea to look at your payroll processes and make sure everything is sorted before the old year closes. We work with a number of businesses and we’ve seen that a well-organised payroll can save a lot of hassle. Here’s our year-end payroll checklist to help you settle payroll matters smoothly and feel prepared for the coming year.
Review your payroll records
It’s best to start by looking at your employee records to confirm that everything is accurate. Check that you’ve got the right personal details: full names, current addresses and national insurance numbers. If you run monthly payroll, have a quick look through the year’s figures to confirm there are no payment or deduction errors. Mistakes can lead to unnecessary costs and possibly trigger an inquiry from HMRC.
Since the government’s freeze on income tax thresholds is expected to continue, the personal allowance is likely to remain at £12,570 for 2025/26. For earnings between £12,571 and £50,270, the rate stays at 20%. Anything above £50,270 is taxed at 40%. If you’re making any final adjustments to pay, double-check that your payroll software has these thresholds set correctly.
Issue your P60s on time
Every employee who was working for you on 5 April must receive a P60 by 31 May. That’s a document showing their total pay and deductions for the tax year. If you accidentally miss an employee, or if it shows incorrect figures, you could face a penalty from HMRC. It’s wise to keep your own record of when each P60 was issued, in case an employee requests a copy later.
For more official information on forms like P60s, have a look at HMRC’s guide to PAYE forms.
Reconcile PAYE payments
It’s important to reconcile all Pay As You Earn (PAYE) payments you’ve made to HMRC with what your payroll reports show. Checking totals for income tax, national insurance and student loan repayments makes it easier to spot any shortfalls or overpayments. If you’ve underpaid, you’ll want to settle the balance promptly. Late or missing payments can lead to fines and possibly interest charges.
If your records show an overpayment to HMRC, you can ask for a refund or have the amount carried forward. Before you do that, have a final run-through of your payroll data to make sure you haven’t simply posted a transaction in the wrong month.
Check updates to rates and thresholds
While basic income tax rates might hold steady, it’s good to look out for any changes announced in the Autumn Budget. National insurance thresholds can shift, and so can the limits for pension contributions or student loan repayments. Keep an eye on official sources for updates.
At the moment, employee pension contributions often start automatically when earnings top £10,000 a year. If any staff are near that threshold, remember that a pay rise could trigger enrolment. The minimum overall pension contribution rate is still 8%. You can find general guidelines on automatic enrolment at gov.uk. If you’re ever stuck, we’re always happy to explain what it means for your business.
Check pension contributions
Workplace pension schemes can shift once the new tax year begins. Providers sometimes change their charges or re-brand schemes, so it’s wise to stay up to date. You’ll also want to check that the right amounts have been deducted from each employee’s wage. Even small errors can add up if they’ve been carried through the entire tax year.
We find it’s good practice to share a quick update with your employees about any changes to pension contributions. It keeps everyone in the loop, and people appreciate clarity when it comes to their retirement savings.
Submit your final full payment submission (FPS)
Once you’ve confirmed your employees’ data is correct, it’s time to send your final FPS through your payroll software. This final submission should reflect all the pay and deduction details for March (or week 52/53 if you run a weekly payroll). Check that your software marks it as the final submission of the year.
You’ll also need to complete your employer payment summary (EPS) if you’ve reclaimed any payments such as statutory maternity, paternity or adoption pay. If you run a small employer’s relief, make sure the EPS accurately reflects your claims.
Plan for next year’s processes
Even though we’re discussing the 2025/26 tax year, it’s never too soon to plan for 2026/27. Think about whether you’ll need extra help, especially if you’ve hired new employees or expanded your business. Sometimes, outsourcing part of the payroll to an accounting practice can free up a surprising amount of time. Our team at John Potter & Harrison can step in at any level, from a simple overview to a fully managed payroll service.
An internal review can help too. Ask yourself if the payroll software is doing everything you want, and make sure the data entry processes are still suitable for your business. If you’d like a quick chat about what’s out there, you can always speak with us or get in touch through our contact page.
Be aware of deadlines and avoid penalties
While it might sound obvious, we’ve seen more than a few businesses accidentally missing key dates. Late filing of your final FPS or late payment to HMRC can lead to unnecessary penalties. Mark your calendar for:
- final FPS due on or before your employees’ pay date for March (or week 52/53)
- P60s must be given to employees by 31 May
- Class 1A national insurance on benefits in kind is usually payable by 22 July if you use electronic payments.
Staying on top of these dates avoids unwanted costs and helps you keep HMRC happy.
Keep records safely
It’s a legal requirement to hold payroll records for at least three years from the end of the tax year they relate to, but we suggest keeping them for at least six years if you can. Digital records are fine, as long as they’re backed up. Having a robust record-keeping system will help if HMRC ever wants to look at your payroll information.
Take a moment to reflect
Once you’ve ticked off your year-end tasks, take a step back and see if there’s room for improvement in your payroll process. Are the right checks in place to prevent errors? Is there a simpler way to track holiday entitlement or statutory pay? It only takes a few minutes to spot small tweaks that can lead to smoother payroll runs.
If you’re looking for an effortless way to handle payroll or you simply have questions about these steps, we’d be happy to help. Contact our payroll team, and let’s see how our year-end payroll checklist can make life a little easier.
