Annual payroll tax reconciliation compares amounts withheld throughout the year with the annual position after the full employee movement and pay history are brought together.
Why differences appear
Differences can arise from joiners and leavers, changes in pay components, bonuses or adjustments that were not reflected correctly in earlier months.
The reconciliation file
- Employee data and movement throughout the year.
- Monthly payroll totals and tax deductions.
- Bonuses, benefits and relevant adjustments.
- Reconciliation to accounting and recorded totals.
Required outcome
A reconciliation that can be explained by employee and in aggregate, with differences and required actions clearly identified before the year is closed.
A sound annual reconciliation depends on clean payroll data. In some cases, the source data must be corrected before the final result can be calculated.