Skip to content
logo Knowledgebase

Update your employees' tax codes at year end

Created on  | Last modified on 

Summary

This article explains how to update your employee's tax codes when preparing for your new tax year in Sage 50cloud Payroll.

Description

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.

You should also clear any week 1 / month 1 flags and check your IR Secure Mailbox for any new tax code notifications.

CAUTION: If you have received any tax code notifications for your employees from HMRC, we recommend that you apply these after you've made the changes via Global Changes. This is because Global Changes will apply the change to all tax codes with the relevant suffix.

Resolution

TIP: There are no separate increases for Scottish tax codes and the following steps apply. 

Update tax codes suffixed by L, M and N

  1. Select the required employees.
  2. Click Tasks then click Global Changes.
  3. Click Tax Codes then click Apply Tax Code Change Where Code has Suffix.
  4. Enter the required value in For employees whose tax code is suffixed by:
  5. Enter the value to amend the tax code by in Set the value by which the tax code is to change:
  6. Enter the effective from date for the new tax code.

    This is the date that the new tax code will be applied. If you have already entered a tax code change with the same effective date, you can select the Overwrite existing tax codes with same effective from date check-box.

  7. Click OK then click Yes then click OK.

All employees with a tax code suffixed by L are now increased by seven. You can repeat these steps to increase tax codes suffixed with M by eight and then tax codes suffixed with N by six


Clear the week 1/month 1 flag

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

Image

Simple, automated and all in one place
Manage your employees’ taxable benefits easily and accurately, with online submissions to HMRC. Deadline for P11D submission is July 6 2021.

Find out more >


Image