As the end of the tax year looms on 5 April, it’s crunch time for accountants. Now’s the time to ensure you’re on top of any changes, such as minimum wage increases or financial updates, to ensure all your clients satisfy His Majesty’s Revenue and Customs (HMRC) requirements.
“The end-of-year reporting process is about helping businesses to meet critical reporting deadlines so they can remain compliant,” says Anita Rasheva, founder of AD Accounting and Business Solutions.
“But it’s also about helping businesses adapt to a changing tax landscape. By staying ahead of these updates, we can guide our clients through a smoother year-end and set them up for success in the new tax year.”
Here’s a checklist of the key updates and changes you need to be aware of.
1. End-of-year reporting
First and foremost, employers must submit their final Full Payment Submission (FPS) or Employer Payment Summary (EPS) for the tax year.
“The last submission must include the ‘final submission’ indicator, which signals to HMRC that all payments and deductions for the tax year have been reported. If the payroll software doesn’t allow for this indicator, an EPS should be submitted after the FPS,” advises Rasheva.
These must be in by 19 April 2025.
Another critical task is providing P60s — which summarise how much an employee has earned and how much tax and National Insurance contributions they’ve paid — to everyone still on the payroll on 5 April 2025.
“Employers have until 31 May 2025 to distribute these, ensuring employees have accurate records of their earnings and tax deductions for the year.”
2. Changes to employer National Insurance contributions (NIC)
There are several upcoming changes taking effect from 6 April 2025 that will require employers to adjust their payroll systems.
First up, the employer NIC rate will increase from 13.8 per cent to 15 per cent, and the Secondary Threshold — the point at which employers start to pay employer National Insurance contributions on an employee’s salary — will drop from £9,100 to £5,000.
“This means more employers will be liable to pay NIC, so this will impact employers’ budgeting and should be factored into year-end planning,” Rasheva says.
Additionally, the Employment Allowance will increase from £5,000 to £10,500, which means more eligible businesses will be able to claim, and at an increased amount.
“This benefits many employers, especially those with a lower NIC liability. The removal of the £100,000 threshold will allow more businesses to access this allowance,” Rasheva says.
3. Update on employee hours data requirements
From April 2026, employers will no longer have to provide detailed employee hours data to HMRC, which is a positive update for many, Rasheva says.
“The administrative burden of tracking Pay As You Earn [PAYE] data was a point of concern for many businesses, so the government’s decision to drop the requirement to report employee hours data will come as a welcome relief.”
4. Reporting on a tax-year basis
From April 2024, those who are self-employed or in a trading partnership must report profits on a tax-year rather than fiscal basis.
So for the 2023 to 2024 tax year, they will need to declare profits from the end of the previous accounting period in 2022 to 2023 up to 5 April 2024. Any additional profit, after overlap relief, will be transition profit. By default, this transition profit is spread equally over the next five years including 2023 to 2024.
“This shift brings a significant change in how self-employed individuals and trading partnerships report profits,” Rasheva says. “It will simplify tax returns, but it does require careful planning to avoid issues with transition profits.”
5. Expanding the cash basis
Another notable development is the expansion of the cash basis for small businesses. Starting 6 April 2024, more businesses will be eligible to use this simpler accounting method, which removes previous limits and restrictions.
Businesses wanting to switch to accrual accounting must opt out of the cash basis in their tax returns. These changes apply only to trading income, not property businesses.
“This change will help reduce the administrative burden for many, making tax reporting more accessible for smaller firms,” Rasheva says.
6. Potential changes in the Official Rate of Interest (ORI)
The Official Rate of Interest (ORI) is used to calculate taxable benefits related to employment loans and living accommodation and from April 2025, it will be reviewed quarterly.
If there are any changes to the rate, these will take effect on 6 April, 6 July, 6 October and 6 January.
“This means the rate could fluctuate throughout the year, impacting the taxable value of these benefits,” says Rasheva.
Further resources
- For more information on the important updates and changes, go to HMRC’s website.
- For more information on the new National Minimum Wage rates to come into force from 1 April 2025, click here.
Unsure of how to approach the incoming National Insurance contribution increase? Discover how your employee benefits could mitigate the impacts of the NIC Increase in this IFA webinar.
