from the Cloud Payroll Blog
Posted on Tuesday, 2nd May '23
by Duane Jackson
On payslips, P45s, P60s and in payroll software, there is a row with YTD on. If you’re unfamiliar with payroll, then you might be wondering what YTD means, and how you use it?
Year-to-date is commonly used to report and measure a total across a year. It can be used for analysing total spends or particular business trends, which can be helpful when comparing figures with competitors. Likewise, it can be an effective tool for measuring earnings.
What does YTD mean in payroll?
YTD stands for Year-To-Date. It’s the total paid to an employee, often broken down into basic pay, plus any benefits or pension contributions, and a final year-to-date total. This will be portrayed to employees on monthly payslips, as well as P45s or P60s. It’s essentially a summary of each employee’s net and gross pay.
How do you use YTD?
YTD is calculated automatically by summing up the total cost spent for each area of payroll. For employees, this can be useful to see, but it’s more applicable for payroll reporting. Year-to-date totals can be matched against payroll budgets to ensure that any fiscal year reporting can reflect the true picture of what has been spent.
Year-to-date values can also help you to see where you can spend more, as well as where you may need to cut back. As most companies will run on a yearly and quarterly budget, rather than a month by month, using YTD values provides a clearer picture. It can be used to analyse particular totals for use in comparison with competitors, such as average salary.
Applications of YTD
1. Reporting
YTD can be an extremely powerful tool for reporting. As it gives you a year-long picture of costs, you can use it to see where you might be able to give pay rises or award additional benefits.
Using YTD costs as a reporting metric also means you can budget best for the next year. Here’s an example:
| Gross YTD | Health Allowance YTD | Tax Paid YTD | Employer NI YTD | YTD Total | Employee YTD Max | Difference |
| 20000 | 613.48 | 1903.4 | 1583.77 | 24100.65 | 28000 | 3899.35 |
| 20000 | 613.48 | 1903.4 | 1822.64 | 24339.52 | 28000 | 3660.48 |
| 19000 | 578.54 | 1715 | 1675.89 | 22969.43 | 25000 | 2030.57 |
| 3800 | 105.76 | 0 | 0 | 3905.76 | 5000 | 1094.24 |
Using example values, you can see how your fiscal year budgets can be adjusted using YTD values pro-rated to each employee’s hours.
While this is a small sample of data, there are many hugely beneficial ways that you can use YTD information for your fiscal and payroll reporting.
2. Tax costing
Every month and every year, businesses have to submit information to HMRC (His Majesty’s Revenue and Customs) through a series of processes. Information is submitted through RTI (Real Time Information) filing, which goes directly to HMRC.
Then, at the end of the year, businesses will need to submit their EPS (Employment Payment Summary), which goes direct to HMRC through a payroll system, like Staffology Payroll. YTD allows for a collective figure to be viewed and submitted, ensuring accurate tax calculations.
3. P60s
At the end of every year, employers have to provide employees with a P60. This is a summary of the year to the end of the tax year. Employees use these to prove how much tax they’ve paid on their salary and whether they need to adjust how much is paid to HMRC. P60s are also often used as proof of income when applying for mortgages or large loans.
4. Opening balances on new payroll software
If you’ve moved payroll software mid-way through a tax year, then you will want to use your YTD values to begin your payroll software. These opening balances will ensure you have the most correct figures as your starting point for new payroll software.
Importing starting balances is simplified through systems used with Staffology Payroll.
Calculating YTD (Year-to-date)
When calculating Year-to-date, you simply sum up the relevant area. For example, if you want to calculate gross YTD, you would use the values from every month so far this year to calculate the gross amount paid to an employee.
Here’s an example of how you would calculate the gross YTD pay for an employee:
Employee 1 is paid a gross annual salary of £20,000 every year. It is month five of the year, and the YTD stands at £8,333.34.
Most payroll software will calculate YTD for you automatically. Staffology Payroll can provide you with a variety of reports, including year-to-date at the click of a button. This offers your business an easy reporting experience when analysing and reviewing YTD. It’s particularly beneficial for P45s and tax calculations.
Make managing Year-to-date (YTD) easy with Staffology Payroll
We offer a range of ways to use YTD, as well as simplified reporting. Staffology can help. Request a demo today.
Duane Jackson, May 2nd, 2023
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