HMRC tax codes in your payroll software
Sage One Payroll makes it easy to accommodate all the tax codes in your payroll and the software automatically keeps all employees’ tax codes completely up to date.
- Save time and reduce errors
- Comply with legislation
- Keep your employees happy
- Manage new shared PAYE personal allowance
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Managing HMRC tax codes with Sage One Payroll
Most of us are familiar with HMRC tax codes but how easy do you find it to manage them in your payroll? Having the right tax codes for each of your employees is vital to make sure they’re paying the correct amount of tax. But it can be complicated and time-consuming to keep them all up to date. It doesn’t have to be. Sage One Payroll has been designed to make managing your tax codes as simple as possible.
Save time and reduce errors
When you are setting up a new employee on your payroll, you need to ensure that you give them the right tax code. The information on their P45 from their former employer will indicate which tax code you should use.You’ll also need to keep your tax codes up to date for all your employees, especially after payroll year end. Each year, new tax codes are issued and you’ll need to ensure that each of your employees are on the correct new code.
With Sage One Payroll, it’s quick and easy to apply the right tax code, as the software automatically updates each employee’s tax code for you.
It’s easy to make any changes and if any codes are missing, it’s just a couple of clicks to go through to the HMRC website to get the additional information you need.
Comply with legislation
As part of running your payroll, you’ll need to ensure you send the right information through to HMRC. With Sage One Payroll, the process is easy.
Sage One Payroll automatically assigns the right tax-free pay allowance and sends over all the data to HMRC to let them know how much income employees have earned and how much tax they have paid. This allows HMRC to check that each employee is on the right tax code and to make any changes to their tax code if necessary.
Keep your employees happy
No one likes paying tax but paying the wrong amount is a huge headache. If your employees owe lots of tax or have been overpaying, it’s likely that they won’t be happy and may take their frustrations out on you. Sage One Payroll can help you to avoid those situations. The software supports all of the tax codes you need, it can even handle codes that occur less frequently, such as:
- K codes for employees who have additional income that hasn’t yet been taxed
- P codes for employees born between 6 April 1938 and 5 April 1948 who are entitled to their full tax-free personal allowance
- Y codes for employees born before 6 April 1938 or over and entitled to their full tax-free personal allowance
- T codes for employees whose tax code includes other calculations to work out their Personal Allowance
- 0T codes for employees who have used all of their Personal Allowance or don’t have a P45
- BR codes for employees where all their income from this job is taxed
- NT codes for employees who don’t pay tax on this income
In Sage One Payroll, if you need to add a HMRC tax code the software will check it’s in the right format. This makes it less likely that you’ll make a mistake and gives you piece of mind that you are using the correct tax code.
Manage new shared PAYE personal allowance
From 6 April 2015, married couples and civil partnerships can transfer up to up to £1,060 of their personal allowance to their partner. This is available for couples who are both pay the basic rate of income tax. There are two new tax codes for this:
- M code for the person receiving the allowance
- N code for the person transferring their allowance
Sage One Payroll supports these new codes, making it easy for you to manage the process.