Update an employee's tax code (P6 or P9)

Summary

How to update an employee's tax code in Sage Payroll.

Description

Start of new tax year

For the 2024/25 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 a change to all employees' tax codes. However, if you receive a P9 or P6 from HMRC, you need to update an individual employee's tax code.

NOTE: Clear any Week 1/Month 1 flags for your employees before you process the first payroll of the 2024/2025 tax year.

Changes during the year

An employee's tax code may change during the tax year. HMRC sends a notification to inform you when a tax code has changed. This is a P6 or P9 notification. This usually happens when:

An employee's tax-free income (Personal Allowance) goes up or down. For example they start or stop receiving a taxable benefit like a company car
A new employee has provided a P46, and HMRC inform you of the correct tax code
You receive new tax codes for your employees at the beginning of the tax year (P9X or P9T)

Resolution

When one of your employees’ tax codes changes, HMRC will send you one of the following:

A paper form P9(T), ‘Notice to employer of employee’s tax code’
An internet notification if you’re registered to use PAYE Online – internet service

To access your online tax codes notices:

Log in to the government gateway.
From the Business tax account home page, select Messages. Select PAYE for employers messages.
Select View your Tax Code Notices.

What you need to do:

Is your employee’s previous pay and tax included with the new tax code? If they are, note these figures.
Update your employee's record in Payroll with their new tax code. Do this as soon as possible and definitely before their next pay run.

▼What is a P6

HMRC issues a P6 to employers to provide details of an employee’s tax code and previous pay and tax. You need to get the leaving date from the employee.

If your employee doesn’t know their leaving date, use the date of the P6 form.

▼What is a P9

When one of your employees’ tax codes changes, HMRC will send you one of the following:

A paper form P9(T), ‘Notice to employer of employee’s tax code’
An internet notification. If you’re registered to use our PAYE Online – internet service

▼How to update an employee tax code

Change their tax code

From Employees, select the relevant employee.
Under Current Tax Details, enter the new Tax Code.
If required, select or clear the Week1/Month1 checkbox.
Select Save.

Enter their previous pay and tax

If a new employee has provided a P46, you may receive a notification from HMRC to inform you of their new tax code. In this case, you also need to enter details of previous pay and tax.

From the Previous Tax details section, choose Employee declaration P45

From the Circumstances list, choose one of the following options:

A	Select this declaration if this is the employee’s first job since the last 6 April. They also didn't get taxable Jobseeker’s Allowance or Employment and Support Allowance. Also no taxable Incapacity Benefit, or state or occupational pension.
B	Select this declaration if this is the employee’s only job but since last 6th April they’ve had another job. Or has received taxable Jobseeker’s Allowance. Or Employment and Support Allowance, or taxable Incapacity Benefit. The employee does not receive a state or occupational pension.
C	Select this declaration if the employee currently has another job. Or select if they receive a state or occupational pension.

In the Tax Code box, enter the tax code from the P6 or P9.
In the Leaving Date box, enter the previous employment leave date. Your employee should provide this. If your employee doesn’t know their leaving date, use the date of the P6 form.
Clear or select the Week1/Month1 check box. If you select this check box, skip to step 12.
In the Final Pay Period list, enter the week or month of the employee’s final pay run in their previous employment.
In the Total Pay To Date box, enter the previous pay from the P6 or P9.
In the Total Pay To Date box, enter the previous tax from the P6 or P9
Save your changes.
NOTE: The employee's Status will change to Starting this pay run (P45 Part 3).

Next time you process this employee’s payments, the tax due calculates using the employee’s new tax code. And if the tax code is cumulative, the tax year values to date.

CAUTION: A 'Tax code invalid' message may mean you have entered an X in the tax code field. An X means the employee is on a week1/month1 basis. You only need to tick the week1/Month1 box. Don't enter X into the tax code field.