2026 end of tax year compliance checklist and guide

Essential end of tax year checklist and guide for growing UK businesses

Time and again, the mantra for HR professionals, payroll managers, and business leaders across the United Kingdom is the same: the sooner you start preparing, the smoother your April will be.

The transition to a new tax year period is a critical window in the payroll calendar. It is often the busiest time for administrative teams, filled with strict deadlines, complex legislative updates, and the pressure to get everything right for the workforce.

With so much to do, keeping tabs on every task is vital, especially for growing businesses that may still rely on manual processes or disconnected systems.

Staying compliant is the aim of the game. To help you navigate this demanding period, we have compiled a comprehensive end of tax year checklist. This resource details every necessary task to properly close the current tax year and set up for the next.

From understanding what rate changes are coming into force to identifying new laws for 2026, being prepared is the best way to avoid the stress that often accompanies the financial year close.

Why is payroll compliance crucial during the year-end transition?

What is payroll compliance and why does it matter?

Payroll compliance is the practice of adhering to all relevant legislation to ensure your payroll is processed correctly, legally, and transparently for every employee.

While that sounds simple, the reality of keeping up with ever-changing rules can be intimidating for many UK managers. Several bodies of law govern employee compensation, ranging from the Employment Rights Act 1996 to the National Insurance Contributions Act 2022. Furthermore, guidance from employment tribunals frequently shifts the goalposts on what is considered correct procedure.

When do tax year changes take effect?

The run-up to the new tax year is pivotal because it marks the deadline for finalising current liabilities and the start date for new legislative requirements. Thus, it is important to apply the right legislation at exactly the right time.

Not all changes happen on payroll dates and deadlines, or neatly on the 6th of April, as some rules, such as the National Minimum Wage, may come into effect as early as the 1st. The consequences of getting this wrong are severe.

What are the consequences of non-compliance?

Failure to respect legislation can lead to substantial fines from HMRC, which is a scenario every business leader wants to avoid. Using a robust end-of-tax-year checklist helps mitigate these risks by providing a structured approach to your obligations, ensuring you don’t fall foul of the HMRC penalty regime. Compliance also ensures you leave a watertight audit trail, which is the lifeblood of proving accuracy should HMRC ever decide to audit your processes.

What actions must be taken to close the current tax year?

To close the tax year effectively, you must complete specific submission tasks and issue key documents to your employees by the strict statutory deadlines.

Completing mandatory HMRC submissions

Your first priority is the Full Payment Submission (FPS). You must ensure your final FPS is sent on or before the last payday of the tax year. This submission tells HMRC about the payments you have made, and the deductions you have taken.

Following this, you must attend to the P46 (car) return if you provide company vehicles, unless you are already payrolling benefits through your software.

Another critical task is the final Employer Payment Summary (EPS). If you have statutory parental pay recovery or an apprenticeship levy to pay, this must be submitted by the 9th of April. This submission notifies HMRC that no further returns are expected for the year. Failing to send this ‘final submission indicator’ can leave HMRC expecting more data, potentially triggering unnecessary chasers.

Issuing year-end documents to employees

Furthermore, you need to issue P60s to all employees working for you on the 5th of April. This document details their total pay and tax for the year, and is essential for them to prove their income for mortgages or tax credits.

Finally, you must handle P11Ds for any non-payrolled benefits provided. This ensures that the correct Class 1A National Insurance is calculated. If you have a PAYE Settlement Agreement (PSA) for minor or irregular gifts or benefits, you will need to submit a PSA1 form to settle the tax on behalf of your employees.

For businesses with over 250 employees, reporting your Gender Pay Gap information is also a mandatory requirement that requires careful data analysis by either the 30th of March, in the public sector, or 4th of April, in the private sector.

How should businesses prepare for the 2026/2027 tax year?

Setting up for the new tax year involves updating your systems with new rates, thresholds, and statutory payment figures to ensure ongoing compliance.

Updating rates, thresholds and tax codes

From the start of the new tax year, you must apply updated holiday pay calculations and entitlement rules. This is particularly relevant for irregular-hours workers, where recent case law has changed the landscape significantly. Additionally, you need to ensure you have the correct Employer’s National Insurance rate in place, as recent budgets have increased this to 15%.

National Insurance thresholds have also changed. The annual salary threshold for employer contributions has decreased, meaning businesses will start paying on a lower amount of income. Statutory payments are also changing, so you must update your systems to reflect the new rates for maternity, paternity, adoption, and new neonatal care leave.

Finally, do not forget to remove any non-cumulative tax code indicators (Week 1/Month 1) so that every employee starts the year on a cumulative code. This ensures they receive their full tax-free allowance spread evenly throughout the year.

Applying new minimum wage rates from 1st April

Make sure to apply the new National Living Wage and National Minimum Wage rates from the 1st of April. It is vital to understand the reference period to know exactly which hours are subject to the new rates. You should also review changes to student loan thresholds and Scottish tax bands to ensure every deduction is accurate.

Our end of tax year checklist walks you through each of these set-ups step-by-step.

Why is considering the wider financial landscape important for employees?

Acknowledging the broader investment and tax landscape demonstrates that you understand the pressures your employees face outside of the workplace.

Understanding your employees' financial concerns

During this season, employees often seek advice or look for information regarding their personal wealth planning. They might be concerned about paying Capital Gains Tax (CGT) on investments or understanding how Inheritance Tax (IHT) might affect a gift they plan to give to a child or put away for the future. Some may want to open a Junior ISA or maximise their own ISAs to ensure their returns remain free of tax. It is important to help them understand how to use their annual allowance effectively.

How accurate payroll supports financial planning and builds trust

While you cannot give financial advice, ensuring your payroll is error-free helps them clarify what relief they can claim and how much net income they will receive. Whether they are worried about stock market volatility, or simply trying to help their savings grow over the years, reliable payroll is the foundation of their financial confidence.

Compliance is not just about avoiding fines. It is mainly about ensuring your employees are paid what they are owed, on time, so they can manage their money effectively. Your staff may be looking to use their ISA allowance, or carry forward allowances before the window closes. They might consider making extra pension contributions, or a one-off contribution, to manage their tax liability.

Understanding that this is a stressful time for taxpayers, who might be worried about higher rates or how to carry forward allowances, allows HR teams to offer better support.

Even a small employer contribution towards financial well-being can go a long way in building trust. Providing accurate data allows them to make informed decisions about stocks, shares, and savings planning for retirement. By simplifying the process, you help them focus on making the most of their investments.

Download our end of tax year checklist resource to:

• Secure your compliance: Ensure you never miss a deadline or overlook a legislative change that could result in a fine.

• Save administrative time: Use a structured, step-by-step roadmap that eliminates guesswork and reduces the manual burden on your HR team.

• Empower your team: Gain clarity on complex tax changes so you can confidently answer employee queries about their pay and tax codes.