The 2020-21 PAYE tax year is coming to an end: are you prepared?

PAYE

The PAYE tax year is coming to an end: are you prepared?

Making sure you stick to PAYE tax procedures is incredibly important if you own a business. This means staying up to date with any changes in the system. PAYE tax can already be a stress point without you having to worry about missing new rules and finding yourself with hefty fines.

 

What are the deadlines?

You will need to process your final payroll for the month, on or before the pay date, as usual. Once this has been submitted to HMRC through the RTI portal, you are able to start on the year end procedures.

You will need to:

  • Update your payroll software. Depending on the software you use, this will be before or after the 6th April 2021.
  • Generate P60s for ALL employees on the payroll. You need to send these by the 31st May 2021.
  • Any expenses and benefits received by employees must be reported by 6th July 2021.
  • Create the payroll for the new tax year on your payroll software. Normally they produce in depth “how to” manuals.
  • Update employee information. See the following.

 

Increase in National Minimum Wage

For those employees paid the minimum wage, the amount they will be paid is changing.

Age range 2020-21 2021-22
Apprentice £4.15 £4.30
Under 18 £4.55 £4.62
18-20 £6.45 £6.56
21-24 £8.20 £8.36
25 + £8.72 £8.91

 

Tax code changes

The budget of March 2021 declared that there would be a freeze of the personal allowance amount in April 2022, until April 2026. The planned changes for April 2021 are to go ahead. For the 2021-2022 tax year the allowance increase to £12,570 per year, reflected in a tax code change to 1257L.

Emergency tax codes based on this personal allowance level will be 1257L followed by W1, M1, or X.

 

Student Loans

The thresholds in which employees will begin to repay their student loans are as follows:

Time period Plan 1 Plan 2
Annually £19,895 £27,295
Monthly £1,657.91 £2,274.58
Weekly £382.59 £524.90

 

Why not get in touch with the payroll team at Big Hand? We focus on giving professional business advice and managing your accounting needs with our expertise you don’t have to worry. All you need to do is call us on 0161 327 2911.

About the Author:

Since 2013, Sophie has been an integral part of the Big Hand team. As a social butterfly, Sophie is mostly responsible for introducing new clients to the company. If you’re an avid networking, you’re most likely to meet Sophie at local events. Alongside attracting new business, she also assists with account management, and she manages payroll on behalf of clients. For fun, Sophie loves to keep fit running or playing korfball with her team. She is also in the middle of learning a new language and so her most recent challenge is attempting to read Harry Potter in Dutch.