Update your employees' tax codes at payroll year end

How to update your employees' tax codes at year end in Sage 50 Payroll.

At the start of each new tax year, you need to check your employees' tax codes are correct.

For the 2025/2026 tax year, the personal allowance remains at £12,570. This means that the emergency tax code also remains at 1257L and you don't need to apply an uplift to all employees' tax codes.  

Clear the week 1 / month 1 flag for all employees at the start of the tax year. After this, if HMRC send you any P6 or P9 notices, apply these to your employees.

 NOTE: If you receive any P6 or P9 notifications that apply the week 1 month 1 flag, keep this in place for these employees. 

Clear the week 1/month 1 flag

Unless HMRC advise otherwise, use a cumulative tax code for all employees at the start of a tax year. Follow the steps below to do this.

 TIP: Week 1/month 1 is non-cumulative. 

1. Select Payroll in the bottom left.
2. Select the required employees.
3. Click Tasks then click Global Changes.
4. Click Tax Codes then click Clear W1/M1 flag.
5. Click Yes then click OK.

Update the tax code

Because the personal allowance has remained at £12,570, you don't need to apply an uplift to all employees' tax codes this year.

If HMRC send you any tax code changes for individual employees, apply these before you process the first period of the 2025/2026 tax year. Find out more on how to change an employee's tax code.

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