Register your annual scheme with HMRC Before you process an annual pay scheme in Sage 50 Payroll, register your annual PAYE scheme with HMRC each year. As part of this, let HMRC know which tax month you'll pay your employees. You need your 13-character Accounts Office reference when you contact them.  TIP: When you register your annual payroll with HMRC, check if you need to re-register each year to continue this arrangement.
Set your employees pay frequency as annual If your employee is already in another company, process them as a leaver in the original company. Then, create a new employee in the new PAYE scheme and select Annually in the Payment Frequency list. As an annual pay frequency only applies to PAYE schemes where you pay all employees annually, the following warning appears: 'Annual pay frequency is only valid in schemes that HMRC recognise as an annual scheme. There are employees in this company that have an alternative pay frequency'
Employer payment summary (EPS) You don't need to submit an EPS to report 'nil payments' for months 1 to 11 in an annual PAYE scheme. If your scheme isn't annual, submit an EPS each month to inform HMRC that no payment is due for the current tax month. Where you're changing to an annual scheme part-way through a tax year, submit a nil EPS for every month until HMRC accept your registration.
Change the date you pay your employees When you register as an annual scheme, you notify HMRC of the tax month that you're paying your employees. If you need to change this month, submit a full payment submission (FPS) for the new period that you're paying the employees. If you change to a later payment date, submit a NIL EPS for the original payment month to inform HMRC you aren't paying anyone.
Process payroll annually When you process an annual pay frequency, you need to consider the following: Tax and national Insurance (NI) Regardless of the cumulative status of the employee's tax code and when you pay them, their tax calculation uses their annual tax free pay. NI calculates on an annual basis. The Director's NIC tab in the year to date (YTD) section of the employee record isn't available when their pay frequency is annual. Your software calculates NI based on their director status as of the payment date: - If the individual is a director as of their annual pay date, their NI calculates as a director for the year
- If they become a director after the annual pay date for a tax year, their NI calculates as an employee for the year
Student/Postgraduate loans To deduct student and postgraduate loans, the calculation is based on the annual threshold. Statutory payments You can record periods of absences for your records, but your software doesn't calculate statutory payments on an annual pay frequency. You need to process any statutory payments manually. Attachment of earnings Attachments of earnings are applicable to annual payments and you can set up and process them as normal. Full payment submissions You can submit a full payment submission (FPS) and FPS adjustment as normal for employees with an annual pay frequency. These submissions include an indicator of MA for this pay frequency. Automatic enrolment An annual pay frequency doesn't affect your automatic enrolment duties. The same annual thresholds apply to pension contributions. The Pensions Module doesn't include employees who have an annual pay frequency. You need to enrol any annually paid employees/non-directors into the pension scheme manually via the employee record if applicable. Online services You can upload annually paid employees to the online payslips and documents services.
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