The 2018/19 tax year is now over, but your clients’ reporting obligations for it are likely to need completing. What still needs to be done, and what in particular should you be careful to look out for this year?

End of year information

As a tax advisor, your involvement with clients’ PAYE reporting might be limited to the P11D filing. However, smaller clients or those recently starting up may well ask you about year-end payroll procedures as well, so it is worth having the basics to hand.

Under real-time information (RTI), employers are required to submit their final full payment submission (FPS) at or before the time that their employee is paid. This applies equally at the year end, although the employer must indicate that the submission is the final submission for the year.

Pro advice. This should have been done on or before the final payday on or before 5 April 2019. Get clients to do this immediately if it hasn’t been done.

An employer payment summary (EPS) may be sent instead of a FPS, e.g. if no payments were made to employees in the last pay period, or as well as an FPS, e.g. if the employer forgot to tick the final payment in the year box when sending the FPS.

Correcting errors

Mistakes happen and it may be that an error in the 2018/19 year does not come to light until after the final FPS has been submitted. Where this is the case, it can simply be corrected by sending in another FPS using the late reporting code “H”.

This year, HMRC will accept an FPS relating to the 2018/19 tax year after 19 April. In previous years it was necessary to use an earlier year update (EYU) once this date had passed.

HMRC is to phase out the EYU, but it can be used this year if preferred to correct mistakes after 19 April.

Pro advice. Where the payroll package does not offer the facility to submit an EYU, basic PAYE tools (HMRC’s free payroll software package available on the GOV.UK w ebsite) can be used for this purpose.

Payment and paperwork

Payments of PAYE and NI contributions for month twelve, e.g. to 5 April 2019, should reach HMRC by 19 April where payment is made by cheque and by 22 April where payment is made electronically. This was the Easter weekend this year, with Good Friday falling on 19 April and Easter Monday on 22 April.

Pro advice. If clients had not made payments early to allow for this, they may find that the payment is treated as having been made late. This will not be a problem if they have paid on time for the rest of the 2018/19 tax year, but if not they may find themselves in receipt of a penalty.

Any amounts outstanding in respect of the 2018/19 tax year should be paid without further delay. Interest is charged on payments made late. Penalties are also charged where payment is made late on more than one occasion in the tax year.

All employees who are employed on the final day of the tax year must be given a P60 by 31 May following the year end.

Pro advice. This does not need to be a hard copy, an electronic version will suffice. This can generally be produced by payroll software.

Expenses and benefits

As mentioned above, the majority of your advice will likely be around reporting benefits and expenses. Where employees have been provided with taxable expenses and benefits during the 2018/19 tax year, HMRC needs to be told about these if they have not been payrolled.

Taxable benefits and expenses that have not been payrolled or dealt with by means of a PAYE Settlement Agreement (PSA) must be reported to HMRC on Form P11D by 6 July 2019.

Pro advice. A separate P11D is needed for each employee.

Where some benefits have been payrolled and others have not, the non-payrolled benefits should be included on the P11D forms. This may be the case if the employee received an employment-related beneficial loan or accommodation (neither of which can be payrolled), along with other benefits which are payrolled.

Pro advice. Remember, benefits and expenses that are exempt do not need to be reported. Paid and reimbursed expenses are covered by a statutory exemption where the expense would be deductible if incurred by the employee directly. This removes the need to report, say, reimbursed travel expenses for business travel.

Salary sacrifice

Care must be taken when valuing benefits for P11D and payroll purposes, particularly where the benefit is made available under an optional remuneration arrangement (OpRA) such as a salary sacrifice scheme. Alternative valuation rules apply where benefits are made available under an OpRA, unless the benefit is one of the following:

  • pension payments and employer-provided pension advice
  • childcare vouchers, employer-supported childcare and workplace nurseries
  • bicycles and cyclists’ safety equipment; or
  • cars with CO2 emissions of less than 75g/km.

Where the alternative valuation rules apply, the value of the benefit (the “relevant amount”) is the higher of the value calculated under the normal cash equivalent rules and the salary foregone. This is the amount that must be entered on the P11D and used to calculate the NI charge.

Existing arrangements

Transitional rules applying to the provision of living accommodation, school fees or cars with CO2 emissions of 75g/km or above where the arrangement was in place on 5 April 2017 and was not varied or renewed before 6 April 2019, mean that the alternative valuation rules can be ignored for these benefits this year.

The alternative valuation rules will come into effect from April 2021 or, if earlier, the date the arrangement is varied or renewed.

Pro advice 1. You will therefore need to ask clients to review this carefully to ensure the correct amount is reported in order for the Class 1A to be calculated correctly.

Pro advice 2. An OpRA is not considered to have been varied if any variation to the arrangement is only as a result of accidental damage or otherwise for reasons beyond the control of the parties.

Employer forms

Employers must also file a P11D(b) by 6 July 2019. This is the employer’s declaration and the Class 1A NI return.

Pro advice. Remember to include payrolled benefits in the Class 1A NI calculation. A P11D(b) must be filed even if all benefits are payrolled and there are no P11Ds to file.

The associated Class 1A NI should be paid by 22 July where paid electronically, or by 19 July otherwise. Employees must be given a copy of their P11D or details of the information included on it by 6 July 2019.

Pro advice. It is now too late to register to payroll benefits for 2019/20 (or to de-register ones already registered), as changes must be made before the start of the tax year. HMRC may allow employers to payroll informally, but where this route is taken the benefits concerned must be reported on next year’s P11D and marked “payrolled”.


A PSA can be used to meet the tax and NI liability on certain benefits on the employee’s behalf. PSAs are now enduring arrangements and once set up remain in place until cancelled by HMRC or the employer.

If a PSA is not already in place but is required for 2018/19, it should be agreed with HMRC no later than 6 July 2019. Existing PSAs should be reviewed to check they are still relevant.

Pro advice. Don’t forget to apply Scottish rates to Scottish taxpayers where applicable.