Day to day PAYE
In this section:
Start of tax year codes and forms
Before the start of the new tax year we 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. We 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
- If you need more help
- More useful links
Setting up new deduction sheets at the start of the tax year
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 (£90 a week, £390 a month or £4,680 a year for 2008-09)
- HM Revenue & Customs (HMRC) has issued you with 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'
Read the 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. We send this out each February. You can also order a copy of the CD-ROM from our 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.
Find out about employer deadlines for filing PAYE online
Ordering the paper form P11
If you still use paper methods you can order your forms P11 from our Employer Orderline.
More about choosing a payroll system
Place an order through the Employer Orderline
Receiving and using new tax year tables
In January or February we 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. For 6 April 2008 you will also be using new tax tables.
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 we'll 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.
We also update the paper tables. We don't automatically send these out but you can download them or order them online or by phone through our Employer Orderline.
Get or order paper tax/National Insurance tables through the Employer Orderline
Receiving and applying new tax year codes
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 we 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 HMRC 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 HMRC office straight away.
Get an example of form P9X (PDF 66KB)
Get an example of form P9(T) (PDF 51KB)
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 willl automatically work out for you the new tax and NICs you need to deduct from your employees 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.
Order the Employer CD-ROM through the Employer Orderline
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.
The tables aren't sent out automatically 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 our 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 now. 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 our related guidance to find out more.
Find out when you need to start filing PAYE returns online
Employee starts/leaves near the start of the tax year
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 our related guides for the detail.
New employee: using the right tax code
When an employee leaves or retires
Implementing changes announced during the tax year
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, we'll 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 take 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 from our website or get them from the Employer Orderline.
Form P7X – use from 18 May 2008 to 6 September 2008 (PDF 57K)
Form P7X (2) – use from 7 September 2008 (PDF 44K)
Place an order through the Employer Orderline
Changes to the 2008-09 Personal Allowance – find out more
If you need more help
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 us an email and we'll reply within two working days.
Starting the tax year - frequently asked questions
Employer helpbook E11, 'Starting the tax year'
Send an email about starting the tax year
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 us in the Welsh language you can email your contact details through our 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.
Send an email to the Welsh Contact Centre
