Payroll - Year End - desktop v2.61.1 web v5.4 Release Report
We are pleased to announce the latest release of Payroll for desktop version 2.61.1 and web version 5.4
These release notes will guide you through what's new in Payroll and provide guidance on how to upgrade your Payroll software to version 2.61.1 (if you run the desktop version) as well as the year end instructions. For hosted and web customers, we will upgrade your system to the correct version.
There will be articles covering:
- How to perform the software update (desktop customers only)
- The new features (which are also summarised below)
- How to copy your year-end data
- How to perform the year-end
https://www.gov.uk/business-tax/paye
https://www.gov.uk/payroll-annual-reporting
Please read all of the guidance before proceeding with the upgrade and if you use Time & Attendance, this will need to be upgraded first. Failure to do so will result in package links no longer working.
Please refer to Year-End Overview for what you need to do next. (Customers with the Payroll desktop version will need to perform the upgrade.
New Features
- New statutory parameters
What have we done?
This release of Payroll included changes to statutory parameters, correct for tax year 2024/2025, as known at the time of release. These include Tax, National Insurance, Statutory payments and benefits.
This includes the reduction of the main rate of Primary (Employee) Class1 NICs for earnings paid on or after 6th April 2024.
Why have we done this?
To ensure the system remains up to date with current legislation
How will you benefit?
Continued legislative compliance
- RTI submission changes
What have we done?
Schemas have been updated to cover RTI submissions for the 2024/2025 tax year
Why have we done this?
To ensure the system remains up to date with current legislation
How will you benefit?
Continued legislative compliance
Details of the change
The BACS Hash code that was previously submitted on the FPS and BACS file is now no longer accepted by HMRC and so this has been removed from the FPS. From version 2.61 onwards, the BACS with RTI flag will be set to false in the company details so BACS will no longer create an unsent RTI submission
- Investment Zone National Insurance Letters
What have we done?
Included in the 2024/2025 tax year update is support for the four new investment zone National Insurance letters and associated thresholds.
Why have we done this?
To ensure the system remains up to date with current legislation
How will you benefit?
Continued legislative compliance
Details of the change
For the 2024/2025 tax year, there are four new NI letters to support businesses who are based in Investment Zones.
The new NI letters are:
- N - (standard category letter)
- E - (married women and widows entitled to pay reduced NICs)
- K - (employees over the state pension age)
- D - (employees who can defer paying 12% NICs and pay only 2% because they are already paying it in another job).
- Rolled up holiday pay for irregular hours and part-year workers
What have we done?
For holiday years starting on 1/4/2024 or later, employers will now have the option to process rolled up holiday pay for employees who have irregular hours as well as part year workers
Why have we done this?
To ensure the system remains up to date with current legislation
How will you benefit?
You will now be able to take advantage of the new legislation and offer rolled up holiday pay for irregular hours and part-year workers ensuring a flexible payroll offering
Details of the change
You can find detailed guidance of the changes here
- Company Sick Pay
What have we done?
As part of this release, we have added the ability to create company sick pay schemes. This allows the system to calculate CSP days for you rather than the manual process that previously existed. To facilitate this we have made improvements to the sick diary and working patterns
Why have we done this?
To make CSP easier to process within the system
How will you benefit?
Manual processing of CSP can be removed for schemes that can be set up within the system making it much easier to ensure employees are paid the correct amount
Details of the change
You can find detailed guidance of the changes in the desktop software, including scheme setup here. The web functionality can be found here. We have also updated the diary functionality to handle the CSP changes. These can be found here.
- Working Patterns
What have we done?
To facilitate the CSP module we have updated and renamed the qualifying pattern functionality so that you can now store the length in hours or days of each working day
Why have we done this?
We have extended this functionality to ensure the CSP module works in an effective manner
How will you benefit?
With the changes to working patterns, it ensures that CSP schemes can work in hours, and partial days sickness can be accounted for
Details of the change
You can find detailed guidance of the changes here
- Statutory Paternity Pay (SPP) legislative update
What have we done?
There is a legislative update to SPP. Employees will now be able to take two periods of 1 week within 52 weeks of the baby’s date of birth
Why have we done this?
To ensure the system remains up to date with current legislation
How will you benefit?
Continued legislative compliance
Details of the change
You can find detailed guidance of the changes here
- NIC Relief on Car Allowance Payments
In September 2023 an Upper Tribunal judgement clarified the law on car allowance payments and NI contributions relief. It stated that that where an employee is reimbursed for mileage at below the Approved Mileage Allowance Payment the difference must be offset against other relevant motoring expenditure e.g. car allowance, thereby reducing the NIC due for both employee and employer.
An example given by the CIPP can be found here and is as follows:
If an employer pays mileage at 10p per mile and an employee does 200 miles, then a 35p per mile difference can be offset against a car allowance payment i.e. £70 offset. This means the car allowance payment must be split into two lines on the payslip. In this case the first £70 would be taxable but NIC free and the balance of the car allowance taxable and NIable.
Payroll supports this through the setting up of a new taxable/non-NIable pay element to handle the NIC relief. When a mileage claim is made the existing car allowance payment would need to be manually reduced to reflect the relief being claimed, and the actual relief entered against the new pay element. Further information on how to set up a new pay element can be found here.
Based on the above example the payslip would look as follows (assume Car Allowance = £400):
Car Allowance £330 (Taxable/NIable)
Mileage Relief £70 (Taxable/Non-NIable)
Automation of the splitting of the Car Allowance base on mileage entered may be achieved through custom calculations. We recommend engaging with our Professional Services team to set this up.
- Bug Fix: Average Holiday Pay calculation fix
What have we done?
We have tweaked the average holiday pay calculation so that anything that isn't included in the average holiday pay, doesn't have its hours included in the calculation either
Why have we done this?
To stop hours/units that shouldn't be counted towards the average holiday pay being included
How will you benefit?
The removal of this bug ensures improved accuracy
Details of the change
In certain circumstances, hours were being included in the average holiday pay calculation that shouldn't have been. This has been improved so that hours that shouldn't be included as the value isn't included aren't.
Please read all of the guidance before proceeding with the upgrade and if you use Time & Attendance or HR Manager, this will need to be upgraded first. Failure to do so will result in package links no longer working.
Please refer to Year-End Overview for what you need to do next. (Customers with the Payroll desktop version will need to perform the upgrade.
