Updating employee tax codes for the new tax year

Before you pay your employees in the 2017/2018 tax year, you should ensure they have the correct tax code. From 6 April 2017, the following tax codes will change:

  • Tax codes with a suffix of the letter L increase by 50, for example, 1100L becomes 1150L.
  • Tax codes with a suffix of the letter M increase by 55, for example, 1210M becomes 1265M.
  • Tax codes with a suffix of the letter N increase by 45, for example, 990N becomes 1035N.

Sage One Payroll automatically calculates the tax code increase for all employees on the L, M and N tax codes. When you process your first pay run in the new tax year, a window appears showing the relevant employee’s 2016/2017 tax codes and the updated tax codes for the new tax year. Simply confirm the changes, then process your payroll as normal.

If HMRC have sent you a P9 notice for individual employees, you must manually change the tax code in their employee record.

Watch our video

To update all employees on L, M and N tax code suffixes

  • 1. Process your first pay run in the new tax year.

The Prepare Employee Tax Codes for Tax Year 2017/2018 window appears.

  • 2. Check the new tax codes are correct. Edit if required.
  • 3. Click Save.

To update an individual employee tax code

  • 1. Go to the Employees tab, then click the relevant employee.
  • 2. Click Edit.
  • 3. Under Current Tax Details, change the tax code, if required.
  • 4. Click Save.

Read more about payroll year end >>

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