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Get ready for the new tax year

Created on  | Last modified on 

Summary

This article explains how to get ready for the 2021/22 tax year in Sage Instant Payroll.

Description

The new tax year starts on 6 April 2021. Before you process in this tax year, you must complete a few simple tasks to set up your software.

Resolution

Check your version

Before you can start processing in the new tax year, you must have installed the update for the 2021/22 tax year.

You should backup your data then make a note of where your current software is installed and check the version of Instant Payroll you're currently using.

  1. Within Sage Instant Payroll, click Tools then click My Instant Payroll.
  2. Check that the version number is v19, if it's not install the latest version now >
  3. Make a note of the application path.

Update your employees' tax codes

For the 2021/22 tax year, the personal allowance increases from £12,500 to £12,570. This means that the emergency tax code for 2021/22 is set to 1257L. You need to update the following tax codes:

  • Tax codes suffixed with an L: The numeric part of the tax code increases by seven.
  • Tax codes suffixed with an M: The numeric part of the tax code increases by eight.
  • Tax codes suffixed with an N: The numeric part of the tax code increases by six.

Clear the week 1 / month 1 flag

If you have any employees on a week 1/month 1 tax code, to ensure their tax calculates cumulatively in the new tax year, you need to clear the week 1 /month 1 flag.

  1. Click Employee, then click Maintain existing employees.
  2. Click Employment Details and enter the new tax code, for example, 1257L.
  3. If the Wk1/Mth1 check box is selected, clear it.
  4. Select the next employee from the right-hand side and amend the tax code.
  5. Repeat these steps for each employee.
  6. Once you update all relevant tax codes and remove any Wk1/Mth1 flags, click Save details.
  7. Click Close Existing Employees screen.

Employment allowance

From the 2021/2022 tax year, there are new rules for claiming the employment allowance. You now need to apply to claim the employment allowance at the beginning of each tax year. Read more >

If you're eligible, you need to set your software to automatically claim employment allowance. If you're unsure you should check with HMRC.

  1. Click Employer then Maintain employer details.
  2. Click HMRC Details.
  3. Select the Eligible for Employment Allowance check box.
  4. Click Save details then click Close Employer Details screen.

Small employers' relief

If you're eligible , you must set your software up to automatically claim it. If you're unsure, you should check with HMRC.

  1. Click Employer then Maintain employer details.
  2. Click HMRC Details.
  3. Select the Small Employer's Relief check box.
  4. Click Save details then click Close Employer Details screen.

You must set up to claim small employer's relief before you process any statutory payments. Read more >

Legislation changes in 2021/2022 tax year

When you set your pay date on or after 6 April 2021, the new legislation settings come into effect. Read more >

You can check the legislation settings for 2021/2022 tax year in Instant Payroll:

  1. Click Tools, then click Legislation.
  2. Click the relevant legislation option.