Employment allowance and the P32

Find out about how the employment allowance calculates on the P32 report in Sage 50 Payroll.

The P32 is the report you run in Sage 50 Payroll at the end of each tax month to see how much you need to pay HMRC.

If you claim employment allowance, it also shows you how much employment allowance you can reclaim each tax month.

A common area of confusion is when the employment allowance value isn't what you're expecting to see. The main cause is if you run the P32 report for the wrong period, or if you run it for an incorrect period in the past.

For more in-depth information about running and checking the P32 visit our print and check the P32 Employer payment Record article.

NOTE: When you've set up the employment allowance, Sage 50 Payroll claims the allowance from tax month 1, regardless of when the employment allowance was set up. This means that you need to run the P32 report from the start of the tax year.

Run the P32

When you run the P32, it's important to run it for the current tax month only.

For example, if you're running it for tax month 4, which runs from 6 July to 5 August, when the criteria box appears, you must enter 4 in both boxes. 

To run the P32,

1. Click Tasks, then Period End.
2. Click P32 Report and enter the required month number.
3. Click OK.

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The value isn't what you expect

If you're running the P32 for the correct period, and the employment allowance value isn't what you expect to see, it's likely that the P32 has been run for an incorrect period in the past.

NOTE: Pay for deemed employees is not eligible for employment allowance.

To resolve this, run the P32 for each individual tax month again up to, and including the current tax period.

For example, if you're currently running it for tax month 4, you should:

1. Run the P32, entering tax month 1 to 1 in the criteria box.
2. Run the P32 again, entering 2 to 2 in the criteria box.
3. Run the P32 again, entering 3 to 3 in the criteria box.
4. Run the P32 again, entering 4 to 4 in the criteria box.

The employment allowance value is now correct for tax month 4.

Where Sage 50 Payroll holds your values

Each time you run the P32, your software records the values in the HMRC Payments table. To view this table, click Company, Settings, then click the HMRC Payments tab.

If required, you can manually amend your employment allowance values in this window. Take note, that employment allowance values that you enter manually don't appear in the P32.

However, to rectify any issues, run the P32 for each tax month at a time to automatically correct these values.

Further checks

Employment allowance only calculates if there's employer's NI liability to offset. If employment allowance is zero, check number 22 on the P32 to see if there's any employer's NI for it to apply to.

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