As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.
Updating employee payroll records
For each employee working for you on 6 April, you’ll need to:
- prepare a payroll record
- identify the correct tax code to use in the new tax year
- enter their tax code in your payroll software
You should include in your payroll:
- all employees you pay in the tax year, no matter how much you pay them
- any employee who has worked for you in the current tax year (since 6 April) even if they’ve already left
Using the right tax code
HM Revenue and Customs (HMRC) will send you a:
- P9T form for any employees who need a new tax code
- P9X form with general changes for employees whose tax code ends with an ‘L’
For April 2019, if your employee’s tax code ends in ‘L’, add 65, for example 1185L becomes 1250L.
If you get a lot of tax code notices, it may be faster to use HMRC’s PAYE Desktop Viewer.
Use the information new employees give you (usually their P45) to work out their tax code.
For part 3 of this process click here