Letters

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Mindful of the many hundreds of thousands of employers using Payroll software and the many years of experience we have in this arena, we’d like to share our ‘top 5 tips’ to help you prepare for your Payroll Year End:

  • It may be sensible to delay installing any non-essential software upgrades you need, for example Windows Vista or Microsoft Office 2007, until after you have successfully completed your Payroll Year End process.
  • When preparing to submit via the Internet, always make sure that you have your user ID number and Password to use HMRC online services as it can take up to ten days to issue replacements. You can check that your user details are correct by logging in to www.gateway.gov.uk
  • Also, once you are successfully logged in, confirm that your local HMRC office and reference are correct, as this can account for many of the problems experienced by employers.
  • Although you are required to submit a form P14 for every eligible employee who worked for you in the tax year, you must only distribute form P60 to those employees still employed by you at 5th April 2007. Do not provide a P60 to employees who left your employment prior to the end of the tax year; they will receive their P60 from their new employer or from HMRC.
  • Before submitting your statutory forms always check your figures. For details of the figures you need to reconcile, refer to HMRC Employer Helpbook E10 (PDF 380K) - Finishing the tax year up to 5 April 2007, or to your software provider's support documentation.

Lesia Gibbons
Payroll Year End Manager, Sage UK

Thanks to Sage UK for those helpful hints. I’m sure readers will find them very useful when preparing for Year End.


As a relatively small employer with 30 employees on the payroll, I find it a tedious and time consuming task to complete my end of year expenses and benefits return. I provide medical benefit cover to all my employees as well as company cars to a few and one or two child care vouchers. I consider myself a responsible employer who wants to do the best for my workforce as well as needing to sleep well at nights knowing I’m on top of my obligations to HMRC. So why is it that you make it so difficult for me to do this? It takes forever chasing down all the pieces of paper and records so that I can fill in P11Ds for everybody and then submit the P11D(b) at the end of the year. Why on earth can’t we put expenses and benefits through the payroll?

R Smedley
Burnley

A recent study by management consultants KPMG confirmed that employers find form P11D one of the most burdensome forms to complete. In turn, HMRC recognises that the expenses and benefits process, and particularly form P11D, is one of the biggest employer challenges. The Government is committed to reducing the administrative burden for customers and has attached challenging targets to achieve this. We are currently working with a broad range of employers and representative bodies to consider a number of possible solutions to ease this onerous task for employers - for example improvements have been made to ‘P11D Fill in Forms on-Screen (with save)’ and ‘P11D(b) – Class 1A calculator’ on the 2007 Employer CD-ROM - and we will continue to consult at every stage and communicate our progress via the Employer Bulletin.


I would like to draw your attention to a breach of confidentiality of personal information.

Why is an employee forced to reveal previous earnings to a new employer on form P45?

Even if a new employee elects to complete a P46 instead of handing over parts 2/3 of form P45; the new employer is very likely to be given this information on the P6 tax code notification anyway!

I appreciate that use of a non-cumulative code could result in more tax being deducted until the end of the tax year, but some individuals would find it preferable to claim a refund later, and maintain their privacy.


C Davis
London

Employees have an obligation to give Parts 2 and 3 of Form P45 to a new employer but, if they object to the disclosure of the total payments to date to that new employer they may, instead, send Parts 2 and 3 to H.M. Revenue and Customs before commencing the new employment.

H.M. Revenue and Customs may then issue a code to the new employer and direct that the non-cumulative basis will apply to all relevant payments which the new employer makes to the employee.

This information is included in the Notes to the employee section of Part 2 of the P45.