Process extra pay for a leaver after issuing their P45

Summary

Process an extra payment to a leaver and inform HMRC in Sage 50 Payroll.

Description

You can pay extra payments to an employee after you mark them as a leaver and issue their P45.

Resolution

If you've issued the employee a P45, don't issue a new P45 after processing the extra pay. Issue them a letter or payslip that includes the date of the payment, the gross amount of pay and any tax deducted.

NOTE:

If your employee left in a prior tax year, the steps below still apply. Where leavers aren't visible on your employee list, go to Criteria and clear the leaver options, then select OK.

Your next steps depend on whether you’ll pay any adjustments within the same tax period that they left. Select the relevant option below to find out what to do.

▼ I'm paying the extra amount within the tax period the employee received their final payment

Use the rollback option to go back and update the employee's final payment with the new values, using the same tax code.

After you reprocess the payment, re-enter their leave date, then Submit a full payment submission adjustment.

Issue the updated payslip to the employee but don't issue a new P45. Arrange to pay the extra amount you owe the employee.

▼ I'm paying the extra amount in a tax period after they received their final payment

Process the extra payment in a subsequent pay run. Follow each section below to ensure you process the extra payment correctly.

Pension contributions

If your employee's record has an active pension scheme assigned, check with your pension provider whether you deduct contributions from the extra payment.

If you don't need to deduct these and to prevent it from calculating, ▼ Enter a left scheme date

Double-click the relevant employee.
Click the Pensions tab, then click the Manage Schemes button.
Select the relevant pension scheme and click Edit.
Set the Left Scheme date to when their leave date.
Click OK, then Close.
Click Save, then Close.

Payment types

The process for making the extra payment to the employee depends on if it's a regular or irregular payment. A regular payment is, for example, the employee's final salary or wage, including week in hand.

HMRC defines an irregular payment as follows:

Accrued holiday pay
Bonus
Arrears of pay following a backdated pay award

If you're not certain which type of payment you need to process, contact HMRC for advice.

Process the payment

Click the relevant option below to see the steps to process each type of payment. If you need to pay a mixture of regular and irregular payments, contact HMRC to confirm which steps to process with.

When you follow the steps for either payment type below, your software automatically includes the 'Payment after leaving' flag that HMRC requires in the FPS. This occurs when the period you process and submit is after their leave date.

▼ Process an extra regular payment

Double-click the relevant employee.
Click the Employment tab.
Amend the following information:

Leave Date Make a note of this date then remove it.

Tax code Enter 0T (Zero T) and select the W1 / M1 checkbox.
Click Save, then click Close.
Set the process date to the date of the payment.
Process the employee's extra payment.
Click the Select this checkbox if your employee is leaving and this is their final payment checkbox.
- If there's a balance remaining to pay on any holiday fund, a message advises this now. Take care to process this correctly
Check the employee's payslip is correct.
Update records for this employee.
Double-click the relevant employee.
Click the Employment tab.
Re-enter the leave date you removed in Step 3.
Click Yes.
Send a letter, or payslip, to the employee.
If you've already printed the P32 for this period, print it again and adjust the next payment to HMRC to account for any difference.
Now submit an FPS for the employee on or before the date they receive the extra payment.
- If you've reprocessed a payment that you'd already submitted on an FPS, submit a full payment submission adjustment rather than an FPS

Leave Date	Make a note of this date then remove it.
Tax code	Enter 0T (Zero T) and select the W1 / M1 checkbox.

We recommend you reprint P11s for the employee, so that you have a complete record of their pay. Don't reissue the employee's P45.

▼ Process an extra irregular payment

Double-click the relevant employee.
Click the Employment tab.

Amend the following information:

Leave date	Make a note of this date then remove it.
Tax code	Enter 0T (Zero T) and select the W1 / M1 checkbox.
Manual NI Entry	If the employee's pay frequency isn't weekly, select this checkbox. You must then manually calculate the NI due on the earnings using the weekly thresholds and enter this value in Enter Payments. For information about calculating NI, refer to HMRC's CA38 National Insurance contributions. To enter the employee's NI manually, click the Summary tab within Enter Payments then double-click the National Insurance Current column. To enter the employer's NI, click the Employer's button within Enter Payments.

Leave date

Make a note of this date then remove it.

Tax code

Enter 0T (Zero T) and select the W1 / M1 checkbox.

Manual NI Entry

If the employee's pay frequency isn't weekly, select this checkbox.

You must then manually calculate the NI due on the earnings using the weekly thresholds and enter this value in Enter Payments. For information about calculating NI, refer to HMRC's CA38 National Insurance contributions.

To enter the employee's NI manually, click the Summary tab within Enter Payments then double-click the National Insurance Current column. To enter the employer's NI, click the Employer's button within Enter Payments.

Click Save, then click Close.
Set the process date to the date of the payment.
Process the employee's extra payment, remembering to enter the manual NI value if applicable.
Click the Select this checkbox if your employee is leaving and this is their final payment checkbox.
- If there's a balance remaining to pay on a holiday fund, a message advises this now. Take care to process this correctly
Update records for this employee.
Double-click the relevant employee, then click the Employment tab.
Re-enter the leave date you removed in Step 3 and click Yes.
Send a letter, or payslip, to the employee including details of the date of payment, gross amount and tax.
If you've already printed the P32 for this period, print it again and adjust the next payment to HMRC to account for any difference.
Now submit an FPS for the employee on or before the date they receive the extra payment.
- If you've reprocessed a payment that you'd already submitted on an FPS, submit an FPS adjustment rather than an FPS

We recommend that you reprint P11s for the employee, so that you have a complete record of their pay. Don't reissue the employee's P45.

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