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

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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. A notification is usually sent to you from HMRC 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:

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

What you need to do:

  1. Is your employee’s previous pay and tax included with the new tax code? If they are, note these figures.
  2. 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.