Preparing for Payroll Year End (PYE) 2025: understanding the pitfalls 

By failing to prepare, you are preparing to fail. 

For many businesses, Payroll Year End (PYE) brings with it a huge amount of stress – looming reporting deadlines, tax code changes and strenuous processes all place pressure on those managing payroll.

With so many variables and an enormous to-do list, it's understandable if you feel overwhelmed.

However, half the battle is knowledge, and with some preparation, you can tackle PYE with confidence (and minimal stress!).

To help you prepare, we've covered three common pitfalls you must avoid if you want a smooth Payroll Year End. 

Incorrect payroll data

In the world of payroll, good data should be non-negotiable and this becomes especially apparent during Payroll Year End.

However, maintaining precise payroll data throughout the year can be a challenge for many businesses, especially when employee information changes frequently.

Note: employee data changes often include updates to home addresses, bank details, tax codes, or salary adjustments.

Incorrect payroll data can lead to significant problems, such as inaccurate tax calculations, complications with employee pay or even non-compliance issues.

To prevent data issues, consider implementing a dedicated approach to data management where you regularly evaluate your payroll data in search of potential errors.

Take this strategy further by implementing HR and payroll system integration, which can significantly minimise human error and save valuable time.

With system integration, any adjustments made to employee data in the HR system are instantly reflected in your payroll software, effectively reducing the risk of errors in future.

For example, if an employee alters their home address, this is automatically changed in your payroll system without you having to do anything, meaning you always have the most up-to-date information.

More content: How to eliminate payroll errors with HR integration

Read here

Excessive payroll admin

All the administrative duties associated with Payroll Year End can feel incredibly daunting.

Firstly, you must conduct a comprehensive review of payroll records and processes to ensure they align with HMRC requirements. 

The administrative tasks don't stop there.

Meticulous record-keeping and the prompt submission of various forms, including the preparation and distribution of P60s to employees, are also essential.

You also need to ensure all finalised payroll data is correctly submitted through Full Payment Submissions (FPS) and Employer Payment Summaries (EPS).

Furthermore, staying up to date with ever-evolving HMRC regulations and deadlines can often feel like an uphill battle.

This said, compliance is non-negotiable, and the consequences of missing a deadline or misinterpreting a rule can be costly, both financially and reputationally. 

More content: What does the 2024 Autumn Budget mean for businesses?

Read here

Tax changes

Tax codes are like the bread and butter of the payroll world.

As such, staying up to date with any changes to tax codes is vital.

Tax codes can change for various reasons, such as adjustments in personal allowances, changes in benefits or updates from HMRC based on an employee’s situation.  

These changes can happen at any point during the year, emphasising the need to stay vigilant and informed.

You need to have processes in place to track and implement any changes.

It’s also worth training your employees to understand their respective tax codes as it enables them to identify any discrepancies.

Note: the use of cloud payroll software can eliminate the possibility of mistakes as the system automatically inputs the correct code.

At IRIS, our cloud payroll software can connect to HMRC's Data Provisioning Service and retrieve and apply notices for you.

These notices include:

• P6: Updated Tax Code and previous pay detail
• SL1: Start Student Loan
• PGL1: Start Postgraduate Loan
• P9: Updated Tax Code
• SL2: Stop Student Loan
• PGL2: Stop Postgraduate Loan

How IRIS can help

We have a wide array of payroll solutions which can suit the needs of any business.

Whether you want software to manage payroll in-house or would prefer to outsource the responsibility, we have you covered.