Sage Payroll Year End Checklist | Step-by-Step Guide for Employers

Processing payroll year end is a key responsibility for employers in the UK. It’s a structured process that involves closing out the current tax year, submitting necessary reports to HMRC, and preparing employee documentation, such as P60s.

Mistakes or delays at this stage can lead to compliance issues or penalties. Using software like Sage Payroll helps businesses navigate these tasks accurately and efficiently.

This step-by-step guide provides a clear breakdown of each payroll year end requirement, ensuring UK employers stay on track, meet deadlines, and begin the new payroll year with confidence and full compliance.

What Is Payroll Year End And Why Does It Matter For UK Employers?

For UK businesses, payroll year end is more than just a deadline — it’s a legal requirement and an essential compliance step. It involves closing out the payroll records for the current tax year and preparing accurate reports for submission to HMRC.

These records affect employee tax details, benefits in kind, pensions, and more. Employers are required to complete a series of tasks, including calculating final payments, making sure tax codes are correct, and producing employee forms such as P60s and P11Ds.

If errors are made or steps are skipped, it can result in penalties from HMRC, over- or underpayment of tax for employees, or a disorganised start to the new tax year. That’s why having a comprehensive and structured checklist is so important.

Sage Payroll helps streamline this process by automating many of the critical year end functions — including tax code updates, FPS/EPS submissions, and report generation.

By using a digital payroll system like Sage 50cloud Payroll, employers reduce the likelihood of human error, improve accuracy, and save time.

When Does The Payroll Year End And What Key Dates Should You Remember?

Every UK business must align its payroll year end tasks with specific HMRC deadlines. These key dates are non-negotiable and are often overlooked due to the pressures of regular operations. Missing them can result in serious compliance issues.

Let’s take a closer look at each critical deadline and what action is required:

• 5 April 2025: Marks the official end of the 2024/25 tax year. Any earnings or deductions up to this date must be included in the final payroll submission.
• By 6 April: Employers should ensure that all employee records are updated, such as address changes or leaver statuses. This is also when your payroll software must be updated to include new tax rates and thresholds.
• 6 April 2025: The start of the new 2025/26 tax year. Employers must use the updated tax codes and apply new thresholds for NICs, student loans, and benefits.
• 19 April 2025: This is the final deadline for submitting your FPS and EPS to HMRC. Missing it could result in penalties and administrative burdens.
• 22 April 2025: The deadline for submitting PAYE and online payment for month 12.
• 31 May 2025: Employers must issue P60s to all employees still on payroll at the close of the tax year.
• 6 July 2025: This is the deadline to report expenses and benefits, which is usually done using P11D and P11D(b) forms.
• 22 July 2025: Deadline for paying Class 1A NICs for Benefits in Kind, or 19 July if using non-digital methods.

These dates should be planned in advance, ideally entered into your accounting or payroll calendar to avoid any oversights.

How Can You Check When Your Payroll Officially Ends?

Many businesses assume that payroll ends uniformly, but in reality, it depends on how frequently payroll is processed and the specific date it falls on.

If your standard pay day falls on 5 April and you run weekly, fortnightly or four-weekly payroll, you may have to process an extra payroll:

• Weekly Payroll: If the final pay period includes 5 April, you’ll need to process Week 53.
• Fortnightly Payroll: If 5 April falls within the pay period, it becomes Week 54.
• Four-Weekly Payroll: If 5 April is within the cycle, you’ll process Week 56.

In these scenarios, the tax code must switch to a week one basis, often referred to as a non-cumulative tax code. This prevents the payroll system from applying cumulative tax deductions incorrectly, which could lead to employees being overtaxed.

Sage Payroll usually automates this step, but employers must verify the tax status updates within their software. If not adjusted, HMRC could flag errors in the employee’s annual tax reporting, requiring amendments in the following year.

After the extra payroll period, tax codes must be returned to the appropriate cumulative codes using guidance from HMRC’s P9X document.

What Should You Do About Leavers And New Starters Before Payroll Year End?

Year end presents a final opportunity to clean up payroll records. Ensuring the correct treatment of employee leavers and new starters is critical before generating and submitting your final FPS.

For leavers:

• Ensure their final working day and final payment are recorded.
• Process their final payslip and issue a P45.
• Mark them as a leaver in your payroll software.

For new starters:

• Collect and input all relevant starter details (including P45 or starter checklist).
• Assign the correct tax code.
• Ensure they are included in the final FPS for the year.

Julie Northover, payroll expert at the CIPP, stresses the importance of this stage. As she puts it, “Year end is a final sweep to ensure nobody has been missed.” Managers and HR teams should communicate clearly to confirm any last-minute changes in staff.

Making corrections after the new year begins is significantly more complex. Once you roll into 2025/26, retrospective updates require special HMRC protocols and may result in delays or additional submissions.

How Do You Process Your Final Pay Run For The Year?

The final payroll of the tax year should be treated with extra care. This is your last opportunity to ensure all taxable benefits, bonuses, or deductions are accounted for.

Here’s how to approach it:

• Confirm the correct payroll period, including week 53/54/56 if applicable.
• Finalise all payments, benefits, and deductions for each employee.
• Process the final payroll run through your software.
• Submit the Final FPS. This includes all employees who were paid during the final period.
• If required, submit the EPS for any adjustments or statutory payments.

You’ll also need to record your P32 payment to HMRC — this is a summary of the employer’s PAYE liability for the tax period.

Submitting incorrect values or missing deadlines can force retrospective corrections. These are now done by submitting an additional FPS — HMRC phased out the Earlier Year Update (EYU) method.

Julie Northover adds, “There is a process for communicating with HMRC about anything that’s not correct, but it’s an admin burden that payrollers like to avoid.”

What Steps Are Involved In Processing Your Year End In Sage Payroll?

Using Sage Payroll, the year end process follows a guided sequence. Once your final FPS and EPS are submitted, you can begin the formal year end process inside Sage.

Key steps include:

1. Navigate to the Year End section in Sage 50 Payroll.
2. Choose the tax year you wish to close (e.g., 2024/25).
3. Submit the final EPS, which includes declarations such as whether your business is ceasing trade.
4. Once submitted, confirm the system prompt that allows you to proceed to year end.
5. Save or archive your final year-end reports for compliance and auditing purposes.

This submission differs from regular monthly or quarterly EPS reports, as it contains final year declarations. After this step is complete, you can begin producing P60 and prepping the new tax year.

Sage provides in-software prompts to guide you through the process, making it easier for even small business owners with limited payroll experience.

How Should You Prepare And Distribute P60s?

P60s are critical tax documents issued to employees at year end. They summarise total pay and tax deductions for the tax year and must be distributed by 31 May 2025.

Every employee who is on payroll as of 5 April 2025, including contractors or deemed employees under IR35, must receive one.

P60s can be:

• Generated digitally and uploaded to a secure portal for employees to access
• Printed and physically handed or posted

Sage Payroll allows both digital and physical generation. However, it’s important to only produce P60s after the final payroll run is complete and any errors or amendments have been made. Julie Northover explains, “The P60 simply summarises the 12 monthly payslips — so if there are no errors throughout the year, you’re unlikely to have issues now.”

Check all final payslips for accuracy and resolve discrepancies before producing the P60s to avoid reissuing them later.

What Is The P9X And How Do You Start The New Payroll Year?

Starting a new payroll year isn’t just about turning a page. Employers must carry out several checks to ensure a smooth transition, beginning with the P9X document issued by HMRC. This outlines the correct tax code changes from 6 April.

Your software will typically apply these automatically, but manual review is essential for:

• Deferred National Insurance contributions (check for valid CA2700 certificates)
• Adjusted childcare vouchers (complete a Basic Earnings Assessment)
• New student loan and postgraduate loan thresholds
• Benefit and expenses categories that may have changed

Julie Northover notes that “the new year checklist is bigger than the year end checklist nowadays.” Employers must treat this process with equal importance to avoid issues in the first payroll cycle of the new year.

Sage and other vendors usually include this information in software release notes, but the official gov.uk resources should always be the final reference for compliance.

Conclusion

Completing your payroll year end accurately and on time is crucial for maintaining compliance and ensuring a smooth transition into the new tax year.

With Sage Payroll, UK employers can streamline each step—from submitting final reports to HMRC to issuing employee P60s and updating tax codes for the year ahead.

By understanding critical deadlines, preparing properly, and using trusted payroll software, employers can avoid costly errors and administrative headaches.

Use this checklist as a practical guide to support your business through every payroll year end milestone with clarity, precision, and peace of mind.

FAQs About Sage Payroll Year End?

What happens if you miss the 19 April payroll submission deadline?

If you miss this deadline, HMRC may issue a late filing penalty. You must submit an additional FPS or EPS as soon as possible to rectify the issue.

Can Sage 50 automatically handle week 53 tax codes?

Yes, Sage 50 can automatically apply a week one basis for tax codes in week 53 scenarios, but it’s recommended to verify settings beforehand.

Is it mandatory to issue P60s for all employees?

Yes, all employees on payroll as of 5 April must receive a P60 by 31 May, including those under IR35 arrangements.

Do you need to submit an EPS if you have no payments to report?

Yes, submitting an EPS is necessary if you’re not sending an FPS for a specific period, or if reclaiming statutory payments or reporting CIS deductions.

How do you correct a mistake after submitting your final FPS?

You will need to send a new FPS with corrected values. The Earlier Year Update (EYU) method is no longer valid.

What is the difference between P11D and P60?

A P60 summarises yearly pay and tax for an employee, while a P11D details benefits and expenses provided by the employer that may be taxable.

Can new employees be included in the year end if they join in April?

Yes, if they are paid before 5 April and included in the final FPS, they will be part of the 2024/25 payroll year.