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 (or equivalent payroll records) 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 updates to expect and when and what action you'll need to take.
On this page:
- Important news and updates
- Setting up new payroll records at the start of the tax year
- Updates to tax and National Insurance tables and software
- Receiving new year tax codes from HMRC
- Applying new tax codes that HMRC sends you
- 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
We will shortly start to issue new codes for 2010-11, but employers may not receive as many as they were expecting. The balance will follow later. If you don’t receive a P9 for an employee or pensioner, continue to use the existing code number.
At the start of the tax year you'll need to set up a new form P11 or equivalent record (either electronic or paper) 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
HMRC strongly recommends that you keep electronic rather than paper-based payroll records. Using software saves you time, reduces errors and makes it easier to file PAYE forms online – a significant advantage now that almost all employers are required to file their Employer Annual Return (P35 and P14s) online.
You can keep electronic payroll records using either commercial payroll software or HMRC's free P11 Calculator. You'll find the P11 Calculator on your Employer CD-ROM - it's very important to make sure you're using the latest version as this will include the most recent PAYE updates from HMRC.
Ordering the paper form P11
If you still maintain paper payroll records you can order your forms P11 from the Employer Orderline.
In January or February HMRC will normally publish new tax and National Insurance tables to use from 6 April - these include any changes that were announced during the last tax year. You’ll need these if you still do your payroll manually. HMRC doesn’t automatically send these out - but they will be included on the Employer CD-ROM, can be downloaded or ordered online or ordered by phone through the Employer Orderline.
If you use commercial payroll software your supplier should automatically send you updates that incorporate these changes. It's important to make sure you get these software updates.
If you use the interactive P11 Calculator on the Employer CD-ROM, HMRC will notify you of the required update. Again, it’s important to get this update - the software will do everything for you.
Increasingly, HMRC sends tax code notices online to employers. It will start sending them online as soon as you register for its ‘PAYE Online for employers’ service – which most employers must now do in order to meet the requirement to file their Employer Annual Return online.
There are two ways of accessing the tax codes that HMRC sends online. You can:
- Log on to the ‘PAYE online for employers’ service on the HMRC website and choose the ‘tax code notices’ option. If you provide the service with an email address, it will send you an email alert each time HMRC sends you an update.
- Use the PAYE Desktop Viewer (PDV). This is an application that you can download and install from the HMRC website. It is particularly suitable for employers expecting to receive a lot of tax code notices from HMRC.
You can also ask HMRC to resume sending paper versions of your tax code notices.
You'll need to update your employees' tax codes before the first pay day of the new tax year. The sections below outline the various forms that HMRC uses to tell you about new tax codes, and explain how to use these codes to make sure your payroll calculations are correct.
Form P9X - generic changes
HMRC will 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 for whom 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 or equivalent payroll record to their payroll record for the new tax year
- 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.
Applying new tax codes using payroll software or P11 Calculator
Using commercial 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 you’re still using paper methods to maintain your payroll records, you'll need to copy the tax code from form P9(T) into box L on your paper form P11. If you haven't received a P9(T) for the employee, follow the instructions on form P9X instead.
You can then calculate the tax and NICs either with:
- the tax and NICs calculators on your Employer CD-ROM
- tax and NICs tables that you can download from the HMRC website or order through the Employer Orderline – there are 'calculator' tables, for use with a hand-held calculator, and manual tables
Whether you’re using the tax and NICs tables or calculators, make sure you use the latest version. If you use an outdated version your figures will be wrong.
If you're still keeping paper payroll records it's worth considering switching to electronic methods (commercial payroll software or HMRC’s free P11 Calculator, as described in the previous section). These work everything out for you automatically and will both save you time and reduce error.
Keeping electronic payroll records also makes it easier for you to file your PAYE forms online. This is a significant advantage over paper-based record keeping now that almost all employers are required to file their Employer Annual Return (P35 and P14s) online. Read the related guidance below to find out more about filing online.
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 are sometimes 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 and will provide any necessary updates to your Employer CD-ROM. You'll need to follow the instructions on form P7X and apply these changes from the date HMRC informs you of.
For example the changes may include:
- any Budget-increased tax codes
- updated versions of the Employer Helpbook E12, ‘PAYE and NICs rates and limits’
- new Taxable Pay Tables
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.