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Leaver's last pay date and leave date are in different tax years

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Summary

How to process a leaver when their leave date and last paid dates are in different tax years using Sage 50 Payroll.

Description

Over payroll year end, sometimes an employee's leave date and last pay date are in different tax years.

For example, the employee leaves in tax month 12 of the 2025/2026 tax year and receives their final pay in tax month one of 2026/2027.

You can process a leaver in this scenario before or after you complete payroll year end. You still need to complete payroll year end and submit the year end submission by the deadline of 19 April 2026.

NOTE:

If the employee leaves before 5 April, you don't need to issue a P60 during year end. Instead, issue their P45.

Resolution

HMRC require that the P45 shows the employee's leave date, with Year To Date values for the tax year their leave date falls in.

To process this:

  • Process the employee's final pay in 2026/2027
  • Set the process date into the 2025/2026. Mark them as a leaver and print the P45
  • Set the process date back into 2026/2027 to submit the full payment submission (FPS)

For detailed steps on how to process this, continue to follow this article.

TIP:

If a leaver doesn't appear on the Employee List at any point, check your Criteria options. For help with checking this, follow the show leavers on your employee list article.  

Process the leaver

  1. Process and update records for the employee's final pay period, but don't send the FPS.
    • If you aren't paying an employee in the tax year their leave date falls in, update a period with £0 pay
  2. Go to Payroll then Change Process Date.
  3. Set the process date to a date in the previous tax year.
  4. On the employee list, select the required employee.
  5. Mark the employee as a leaver and produce their P45.
  6. In the Select your stationery dropdown, select the relevant P45 option then click Print then click OK.
  7. Select Finish. The following message appears:
    • 'Employment end date falls before a later period which has already been updated. Do you want to continue?'
  8. Select Yes, then Save.
  9. Select Close.
  10. Set the process date to the employee's pay date in the 2026/2027 tax year.
  11. Submit the FPS as normal.

Your software automatically includes both the date the employee left and the values from the 2026/2027 payment to HMRC.

P45 information

The steps above mean that any taxable pay and tax paid in month one of 2026/2027 isn't on the employee's P45. This is correct based on HMRCs requirements. HMRC will issue a new tax code to recover any underpaid tax in the 2026/2027 tax year.

If the P45 displays month number one but includes figures from the previous tax year, this is correct. This occurs because the employee received a payment in the new tax year but left during the previous tax year.