The new tax year starts on April 6th, and there are some significant changes this time around. The basic Personal Allowance will be £12,570 for the whole of the UK. The starting point under PAYE is now set at just over £242 per week – that’s an increase from last years’ amount, which was itself raised by 4%.
Here at The Financial Management Centre, we have gathered guidance for you to refer to once the new tax codes are established.
What You Need To Have Ready By April 6th
For each employee who will be working for you on April 6th, you’ll need to:
- Prepare a payroll record.
- Identify the correct tax code (including the valid prefix, for example, ‘S’ or ‘C’)
- Enter the correct tax code on the payroll record
When HMRC send a new tax code for any of your employees, you’ll receive one of the following:
- A paper form P9(T), ‘Notice to employer of employee’s tax code’
- An internet notification of coding if you’re registered to use our PAYE Online — internet service
To access your online coding notices:
- Go to www.gov.uk/paye-online-log-in and select ‘Sign in’
- From the Business tax account home page, select ‘Messages’ and then select ‘PAYE for employers messages’.
- Select ‘View your Tax Code Notices’
- From the ‘Tax Year’ drop-down box, select the new tax year (2022 to 2023)
Keep this P9X with any new tax codes until you’re ready to set up your 2022 to 2023 payroll. HMRC will not send a new tax code for every employee.
Employees who are not eligible to receive a new tax code will need copies of their authorised 2022-23 payroll records and continue using these for 2023. Do not copy or carry over any Week 1 markings on month one payments, as they indicate when this employee’s pay should match up with other employees’ start date(s).
When employees receive a new tax code, they will keep and use the form P9(T) or other notification with their most recent date on it for each worker.
Although you will need to:
- Scrap any form P9(T) or other tax code notification for the same employee with an earlier date
- Copy the tax code from the form P9(T) or other tax code notification onto your payroll record
- Update any tax codes where you’ve received form P9(T) or other tax code notifications after you’ve set up your payroll records
The payroll records for these employees are now ready for the new tax year.
What To Do For Employees Leaving
You don’t need to change the tax code for any employee who leaves before April 6th, even if you’ll be paying them after that date. Just use their old one.
This doesn’t apply to payments after you’ve already given an employee a P45. In these circumstances, the tax must be deducted using the appropriate codes for employees with S or C prefixes in their tax codes on a non-cumulative basis.
What To Do For New Employees
For new employees starting between April 6th and May 24th and providing a P45, follow the instructions at: www.gov.uk/new-employee.
Although if you have an agreed exemption from online filing and operate a manual payroll, follow the instructions in the RT7.
How Will Manual Payroll Be Affected?
Use the Taxable Pay Tables Manual Method (April 2022) if you have an agreed exemption from online filing and operate a manual payroll. Continue to use tax tables A, which have not been changed but are still valid for this year’s taxes -or circulate them until next April.
How Will Basic PAYE Tools Be Affected?
This is an excellent way for businesses to get their taxes done quickly and easily with HMRC’s Basic PAYE Tools (BPT). You can use this P9X once the new tax year becomes available in BPT so that you won’t have any problems whatsoever.