In this section:
- Starting the tax year: codes and forms
- Monthly/weekly payroll and form filling
- End-of-year tasks: annual return and form filling
- Non-standard paydays or moving paydays
- PAYE for special types of pay
- PAYE if your business closes or changes
- Pension payments and PAYE
- PAYE problems, checks, penalties and appeals
Starting the tax year: codes and forms
Before the start of the new tax year HM Revenue & Customs (HMRC) may send you updates containing new tax codes and tax and National Insurance tables to use from 6 April. To ensure that your employees pay the right tax from the start of the year you'll need to set up new P11 Deductions Working Sheets for them and apply these new updates and codes. HMRC may send you additional updates after the Budget - you'll normally need to apply these from 18 May.
This guide provides an overview of what forms to expect and when and what action you'll need to take.
On this page:
- Setting up new deduction sheets at the start of the tax year
- Receiving and using new tax year tables
- Receiving and applying new tax year codes
- Employee starts/leaves near the start of the tax year
- Implementing changes announced during the tax year
- Starting the tax year - further information
- More useful links
At the start of the tax year you'll need to set up a new form P11 - or equivalent record - for every employee who'll be working for you in the coming tax year and for whom any of the following applies:
- their pay is at or above the National Insurance contributions (NICs) Lower Earnings Limit (£95 a week, £412 a month or £4,940 a year for 2009-10)
- HMRC has sent you a tax code for this employee
- you are required to operate a tax code taken from their form P45
- you have paid your employee and are required to operate tax code BR in accordance with the P46 procedures described in our guidance 'Taking on a new employee'
Benefits of using payroll software
If you're still using manual payroll, it's worth considering switching to using payroll software which includes new tax year updates and works out all the figures for you, avoiding the need to use tax tables. You can use either commercial payroll software or HMRC's free P11 Calculator.
You'll find the P11 Calculator on your Employer CD-ROM - this contains most of the forms and guidance you'll need to run your payroll throughout the year. HMRC sends this out each February. You can also order a copy of the CD-ROM from the Employer Orderline, either online or by phone. It's very important to make sure you're using the most recent version with built in updates.
Using software will also make it easier for you to meet important deadlines for employers to file PAYE (Pay As You Earn) forms online.
Ordering the paper form P11
If you still use paper methods you can order your forms P11 from the Employer Orderline.
In January or February HMRC will normally tell you about new National Insurance tables to use from 6 April - these include any changes that were announced during the last tax year.
If you use commercial payroll software your supplier should send you updates automatically. It's important to make sure you get these.
If you don't use commercial payroll software HMRC will notify you of all the changes by updating the Employer CD-ROM, which contains the P11 Calculator as well as separate electronic tax and National Insurance tables to use with paper forms.
HMRC also updates the paper tables. They don't automatically send these out but you can download them or order them online or by phone through HMRC’s Employer Orderline.
You'll need to update your employees' tax codes before the first pay day of the new tax year.
Form P9X - generic changes
We'll send you details of any generic changes to your employees' tax codes on form P9X Tax codes to use from 6 April. These changes are normally made because new tax rates, thresholds or allowances are coming into effect and will affect the amount of tax you'll need to deduct from your employees' pay from 6 April.
For employees where you haven't received a form P9(T) and for whom you don't have an unused P6 (see later sections):
- carry forward the authorised tax code from their last year's form P11 to their new tax year's P11
- apply the instructions from form P9X
If you have received a form P9(T) for an employee, or you have an unused P6 for them which arrived too late to use, follow the guidelines in the sections below.
Form P9(T) - individual changes
For some employees HMRC may also send you form P9(T) Notice to employer of employee's tax code. This shows a revised tax code for the following tax year. You won't get a new individual tax code for every employee - only if individual adjustments are needed to their tax code.
If you get a form P9(T) for an employee, you must:
- scrap any previous P9(T) for the same employee which has an earlier date
- keep the most recent P9(T) to update an employee's record
- use the code shown on the new form from 6 April
Where, exceptionally, you receive a P9(T) or other tax code notification significantly later than the date from which it is to be applied contact your tax office for confirmation of the code to be used.
Employee not issued with a form P9(T) but has an unused form P6
If you received an in-year tax code change for an employee on form P6 but it arrived too late to use it in the last year, carry forward this code instead for the new tax year and follow the P9X instructions.
Tax codes ending A or H
If the tax code you're carrying forward ends in A or H, you should contact your tax office straight away.
Applying new tax codes using payroll software or P11 Calculator
Using payroll software or HMRC's P11 Calculator on the Employer CD-ROM makes dealing with new tax codes quick and simple. You simply enter the new tax code - from form P9(T) or by following the P9X instructions - into the relevant box.
As long as you're using the updated version of your software or the CD-ROM it will automatically work out for you the new tax and NICs you need to deduct from your employee’s pay. There's no need for you to refer to any tax and National Insurance tables. But do make sure you're using the latest version.
Applying new tax codes when using the paper form P11
If using paper methods you'll need to copy the tax code from form P9(T) into box K on your paper form P11 deduction sheet. If you haven't received a P9(T) apply the instructions on form P9X.
You can calculate the tax and NICs either with:
- the tax and National Insurance calculators on your Employer CD-ROM
- tax and NIc tables that you can download from our website or order through the Employer Orderline
If using the calculators, make sure you're using the latest version of the CD-ROM. If you use an outdated version your figures will be wrong.
If using the tables (which include 'calculator' tables for use with a hand held calculator or manual tables) again make sure that you have the most recent versions. If you don't the figures you work out will be wrong.
HMRC won’t automatically send you new versions of the tables, but you can download or order them below.
If you're still using paper methods it's worth considering switching to electronic methods (payroll software or HMRC’s free P11 Calculator described earlier) as these work out everything for you automatically and will both save you time and reduce error. They will also make it easier for you to file PAYE returns online if you're not doing so already. Employers with 50 or more employees must file the End of Year Return (forms P14 and P35) online. If you have fewer than 50 employees you have until at least April 2010 to do so, but you can claim a tax-free payment if you do so sooner. Read the related guidance below to find out more.
There are special rules about which tax code to use if an employee starts or leaves work near the end/start of the tax year. Read the related guides below for the detail.
There may be more changes to make to your employees' records after the start of the new tax year as a result of the Chancellor's spring Budget statement. If so, HMRC will send you an update on form P7X Tax codes from 18 May and an updated Employer CD-ROM. You'll need to follow the instructions on form P7X and apply these changes from 18 May.
For example the changes may include:
- any Budget-increased tax codes
- updated versions of the Employer Helpbook and E12 PAYE and NICs rates and limits
- new Taxable Pay Tables
For the 2008-09 tax year a further set of updates was issued on 6 August. These take account of changes to the Personal Allowance, which took effect on 7 September.
It's important to destroy any earlier versions of tables and guidance you may have and make sure you use the current ones supplied on the updated CD-ROM. If you use paper-based methods you can download new versions or get them from the Employer Orderline.
Follow the links below to get quick answers to common questions on starting the tax year.
If you still can't find what you're looking for, send HMRC an email and they'll reply within two working days.
Alternatively you can call the Employer Helpline on Tel 08457 143 143 or (if you've been established for less than three years) the New Employer Helpline on Tel 0845 60 70 143.
Both helplines are open from 8.00 am to 8.00 pm, Monday to Friday and from 8.00 am to 5.00 pm, Saturday and Sunday.
If you have hearing or speech difficulties and have specialised equipment such as Minicom you can use textphone on Tel 0845 602 1380.
Getting help in Welsh
If you want to communicate with HMRC in the Welsh language you can email your contact details through this website and an adviser will call you to deal with your query about starting the tax year. Alternatively you can call the Welsh Contact Centre on Tel 0845 302 1489.