Payroll year end checklist: Steps and guidance for SMBs

What is payroll year end?

The payroll year end is the process of closing your payroll records for one UK tax year and submitting final reports to HMRC. It confirms that employee pay, tax, National Insurance and deductions are complete and accurate for that year. It involves submission of a final FPS (Full Payment Submission) and potentially Employer Payment Summary (EPS).

When is payroll year end?

he UK tax year closes on 5 April each year. For the 2027 payroll year end, the 2026/27 tax year closes on Monday 5 April 2027 and the new tax year starts on Tuesday 6 April 2027.

To help you get your ducks in a row, we’ve put together a payroll year end processing checklist with everything you need to do, some important dates for the diary and a downloadable checklist summarising these details. 

Your payroll year end checklist 2026/27

Managing end of year payroll is much easier when you follow a clear, structured approach. We’ve put together a year end payroll checklist that breaks the process into manageable steps, explaining what to do, when to do it and why each stage matters, so nothing slips through the cracks. 

Let’s look at each step in turn and how they fit together to keep your payroll year end compliant and stress free. 

Step 1: Work out when your payroll period ends

Before you run any final submissions, you need to confirm when your last payroll period of the tax year ends. For most businesses, this will be the final pay date on or before 5 April, but the exact date depends on whether you pay weekly, fortnightly, four-weekly or monthly. 

Getting this wrong can lead to earnings being reported in the wrong tax year, which affects employee tax records and can create avoidable HMRC queries. As part of your year end payroll checklist, double-check your pay calendar and make sure your payroll software is aligned with your actual pay frequency. 

Step 2: Check for new starters and leavers 

Next, review your payroll records for any employees who joined or left during the tax year. Starters need correct starter information recorded, including their P45 or P46, and you should also confirm their tax code, National Insurance number, and bank details to avoid delays or errors in their pay. 

Leavers must have leaving dates and final payments accurately recorded. Accuracy here is crucial because HMRC uses this data to update individual tax records. If these details are missing or incorrect, employees may end up paying too much or not enough tax, which can result in penalties for them or costly corrections for your business. 

Step 3: Process your final pay run and submit the FPS

Your final payroll run for the tax year is where everything comes together. You’ll calculate final pay, deductions and statutory payments, then submit a Full Payment Submission (FPS) to HMRC on or before your employees’ pay date. 

The FPS tells HMRC that this is your final submission of the year, so any mistakes can have a knock-on effect for both you and your employees. Payroll errors don’t just cause admin headaches; they can damage trust and lead to penalties, which is why it’s important to take extra care on this step of your payroll year end checklist. 

Step 4: Submit your Employer Payment Summary (EPS)

 If you need to claim Employment Allowance, recover statutory payments or report no payments made to employees, you’ll also need to submit an Employer Payment Summary (EPS). This ensures that HMRC adjusts what you owe correctly for the final period.  

The EPS plays an important role in reconciling what you’ve paid employees with what you owe HMRC. Reviewing individual net pay against deductions at this point helps to ensure that totals make sense before you officially close the tax year. 

Step 5: Process your payroll year end

Once your final FPS and any EPS submissions are complete, you can formally process this within your payroll system. This step locks the year, produces final reports, and prepares your records for the new tax year. 

This is also the time to review your internal reports for accuracy and store them securely for compliance purposes. Many SMBs find that automated payroll systems reduce the risk of errors here, as they guide you through year-end tasks and prevent accidental changes after the year is closed. 

Step 6: Prepare and share your P60s

After the tax year ends, you must provide a P60 to every employee who was on your payroll on 5 April. This document summarises their total pay and deductions for the year, and must be issued by 31 May 2027,

Employees rely on P60s for important financial purposes like mortgage applications, tax returns and benefit claims, so delays or inaccuracies can cause real problems. Providing accurate P60s also helps to maintain trust with your staff and ensures that your business stays compliant with HMRC reporting requirements. 

Step 7: Check for tax code changes and prepare for the new tax year 

As you move into the new tax year, HMRC will issue updated tax codes for some employees. These usually arrive via payroll notices and need to be applied from the first pay run after 6 April. 

Failing to update tax codes can result in employees paying too much or too little tax, leading to complaints and corrections later on. It’s important to stay on top of updates to relevant legislation, such as the personal allowance position. The personal allowance remains frozen at £12,570 until 6 April 2031, so there is no general uplift to standard codes, although some employees may still receive individual changes depending on their circumstances. Reviewing current employment laws as part of your year end payroll checklist helps to ensure that your payroll is ready for the new tax year 

Step 8: Report expenses, benefits and P11Ds

If you provide taxable expenses or benefits, you’ll need to report these to HMRC. Traditionally, this has been done using P11D forms, with deadlines falling after the end of the tax year. 

Keeping track of deadlines is a core part of any year end payroll checklist. Missing key dates during end of year payroll can lead to penalties and unnecessary stress, so it’s worth having these clearly documented and shared internally. 

Here’s a quick guide to the key dates: 

• 5 April 2027: End of the 2026/27 tax year; deadline to register any benefits you want to payroll voluntarily in 2027/28
• On or before final pay date: Submit final FPS
• By 19 April 2027: Submit EPS if required
• 6 April 2027: Start of the 2027/28 tax year; phase one mandatory payrolling of benefits begins
• By 31 May 2027: Provide P60s to employees
•  By 6 July 2027: Submit P11D and P11D(b) forms for 2026/27 benefits that are not payrolled, if applicable

This  isn’t just about closing the books; it’s also about preparing for what’s coming next. Legislative changes often take effect from April, so early preparation helps to ensure compliance and avoids last-minute scrambles. 

Several updates for 2025/26 affect costs, reporting and employee entitlements, making it especially important to review your payroll processes ahead of time. 

National Insurance and Employer Reliefs 

The Employer Class 1 National Insurance rate remains at 15% for 2026/27, and the secondary threshold is £5,000 for 2026/27, so the cost increase from April 2025 carries into this year end. This change directly affects employer payroll costs, particularly for growing SMBs. 

Employment Allowance stays at £10,500 for 2026/27. Only one company in a group of connected companies or charities can claim it. Small Employers' Relief compensation increased from 8.5% to 9% from 6 April 2026, so eligible employers can reclaim 109% of statutory family pay. Understanding how these changes interact with your payroll year end figures helps you to forecast costs accurately for the year ahead. 

Pay rates and statutory payments 

National Living Wage and National Minimum Wage rates were updated from 1 April 2026: £12.71 for workers aged 21 and over, £10.85 for 18 to 20 year olds, and £8.00 for 16 to 17 year olds and apprentices. These may require changes to pay structures and budgets. Statutory Neonatal Care Pay now sits within the statutory family payments that increased in April 2026. The next NLW uprating is due in April 2027. The rate has not been announced yet. The Low Pay Commission's indicative range is £13.02 to £13.34, with a central estimate of £13.18. The Low Pay Commission's recommendation is due in October 2026, and government confirms the final rate afterwards, so use the confirmed figure for your April 2027 pay run.
 

Statutory Sick Pay changed from 6 April 2026 under the Employment Rights Act 2025:

• The flat weekly rate rose to £123.25.
• SSP is now payable from the first day of sickness; the three waiting days are gone.
• The Lower Earnings Limit no longer restricts eligibility, so all employees qualify.
• SSP is calculated as the lower of £123.25 or 80% of average weekly earnings.

Statutory family pay (SMP, SPP, SAP, ShPP, SPBP and SNCP) rose to £194.32 a week from April 2026, and the Lower Earnings Limit rose to £129 a week. Paternity and parental leave became a day one right from April 2026 with the length-of-service criteria removed. These changes affect payroll calculations directly, so they should be factored into your planning.

Taxation and reporting changes 

The income tax personal allowance remains frozen at £12,570, although Scottish income tax bands continue to change. Employers with staff across different regions need to be especially vigilant. 

For student loans, Plan 5 repayments began in April 2026 for English undergraduates who started courses on or after 1 August 2023. The Plan 5 threshold is £25,000 a year, with 9% repaid above it. The 2026/27 thresholds are £26,900 (Plan 1), £29,385 (Plan 2), £33,795 (Plan 4) and £21,000 (Postgraduate Loan).

Mandatory real-time reporting of benefits in kind starts from 6 April 2027 for phase one benefits, replacing P11D forms for those benefits, with most other benefits following from April 2028. This applies from the next tax year, so preparing systems and processes now helps your business avoid a last-minute scramble.

Key actions for employers 

Finally, let’s sum things up with a list of the key actions you need to take as an employer to implement these changes when preparing for payroll year end: 

• Review and update payroll software to reflect new rates and thresholds 
• Reassess budgets based on increased employer NIC costs 
• Confirm whether your payroll software supports payrolling phase one benefits, and list your company cars, fuel, vans and private medical cover
• Communicate pay and statutory changes clearly to employees 
• Check eligibility for allowances, reliefs and statutory payments 

The payroll year end is a critical moment for UK SMBs, combining compliance, accuracy and forward planning. Following our structured payroll year end checklist helps to ensure that your submissions are correct, employees receive the right information, and your business is ready for the new tax year. 

PeopleHR’s payroll tools are designed to support every stage of the process, from accurate calculations to automated reporting. With integrated guided workflows and clear audit trails, you can reduce errors and save time during even the busiest periods. 

If you’d like to see how it works in practice, you can explore a demo or speak to our team to see how PeopleHR can support your next year end. 

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If you enjoyed this article, you may be interested in reading: 

• Payroll Compliance Guide [Checklist Included] 
• A Guide to Understanding Payroll Reports 
• A Comprehensive Guide to Payroll Management

If you enjoyed this article, you may be interested in reading:

• Payroll Compliance Guide [Checklist Included]
• A Guide to Understanding Payroll Reports
• A Comprehensive Guide to Payroll Management