This is the fourth and final stage of completing payroll year end. To see all four stages, visit the payroll year end 2025 hub.

Before you process in the new tax year, follow the steps below to ensure your software is ready.

TIP: If you'd like to follow a checklist for this, visit the get ready for the new tax year - checklist article.

1. Check you're using the correct version

Before you can start processing in the new tax year, you must have installed the year end update, v31.00.229.

To check your version number:

1. Log in to Sage 50 Payroll as normal.
2. Click Help then click About.
3. Under Program Details check the Version Number.

If you need to update, you can find out how in our download and install the Sage 50 Payroll year end update article.

2. Update your employees' tax codes

For the 2025/26 tax year, the personal allowance and emergency tax code remain the same at £12,570 and 1257L. This means you don't need to change your employees' tax codes unless informed to by HMRC.

You do however need to remove the week 1 / month 1 flag on any employees' tax codes before processing in the new tax year. Update your employees' tax codes.

3. Small employers' relief (SER)

If you're eligible for SER, you need to set your software to calculate and claim it.

Your software only calculates SER if you enable it before you update records.

1. Click Company then Settings.
2. Select the Eligible for Small Employers' Relief check box.
3. Click OK.

4. Apply for Employment Allowance

Employment Allowance (EA) allows eligible employers to reduce their annual Employers National Insurance liability. The allowance has increased to £10,500 for the 2025/2026 tax year.

You can easily apply to HMRC to claim Employment Allowance and keep track of how much you've claimed through your software. HMRC started accepting 2025/2026 applications from 6 March 2025.

TIP: Make sure you set your process date to 06/04/2025 before you apply. 

To find out more, visit our Employment Allowance article.

5. Pensions module

If you use the pensions module, follow the steps below.

Automatic enrolment phasing

When you process the first period of the new tax year, you're prompted to check your pension contribution rates are correct.

Find out how in our Automatic enrolment phasing - update the percentages using the Pensions Module article.

Pensions Data Exchange

If you use Pensions Data Exchange (PDX) to send pension data to your provider, there are some additional steps to complete at the start of the tax year. Prepare Pensions Data Exchange for the new tax year.

New legislation for the 2025/2026 tax year

There are a few changes to payroll legislation in the new tax year, including a change to the National Minimum Wage from 1 April.

If you'd like to see the new legislation, visit our payroll legislation for the 2025/2026 tax year article.