Sage Payroll and coding fail

ExcelAnt

Hello,

For one of our new employees we were given a p45 that had the tax code 0T on a week 1 month 1 basis. This led to the employee overpaying his PAYE by a large sum.

In addition my former manager decided to not pay him in month 7 as we had not received the P45 and pay him double in Month 8, leading to an overpayment in PAYE and NIC.

My question is twofold, since we're not submitting the information to HMRC till year end can we just do the manual calcs and ignore the software side until we submit the end of year forms, adjusting as necessary?

And is there a way to do this in Sage?

Otherwise he will be waiting nearly 6 months for a rebate that was basically my old managers .....error (using clean language on this one is hard!)

Advice much appreciated.

Rozzi Rainbow

Hi, firstly if their P45 says tax code 0T then you have to use that. I agree it looks as though it's incorrect (and maybe means the previous employer had paid them without ever receiving a P45 or P46) but it may be that for a reason. I would advise the employee to call the HMRC taxes helpline to see if they can get it changed.

With a 0T tax code, whether you'd processed month 7 and month 8 separately, or double in month 8, would result in the same amount of tax being deducted.

ExcelAnt

Hiya to clarify,

In month 9 the Code was changed by HMRC to 810L. Also the double payment meant NIC was Overpaid due to the way it is calculated.

On the original P45 it showed he had been paid zero by the previous employer, so he wasn't there long enough to A) be paid and for tax codes to catch up to him.

Rozzi Rainbow

If the new tax code is cumulative (and not week 1/month 1) then when you process the month 9 payroll, the tax will all sort itself out.

To sort the NI on the double payment (I hadn't given that a thought, I was just thinking about the tax aspect) just process one payment in month 7 and one in month 8 and pay him the total of the two net payments. These may still have to be on 0T tax code though depending on what date it was changed to 810L as I don't believe you are allowed to backdate a change in tax code.

ExcelAnt

Hiya Rozzi,

And if you had an incompetent manager who decided to ignore that fact and just process them both in month 8?

I guess we could roll back and rerun the payroll (PAIN!!) we only have 30 employees though.

So if we consider that the payroll is done and dusted but wrong, can it be adjsuted in year without rolling back? else Im rolling the thing back.

The PAYE I expected to "be repaid" as he overpaid under the 0T code, then in month 9 he has paid the normal rate, without considering the overpayment under the old code. The PAYE did not sort itself out

Rozzi Rainbow

You only need to rollback and reprocess the one employee, not the whole payroll run. I don't believe there is any way of adjusting without rolling back.

If the PAYE hasn't sorted itself out in month 9 it looks like you have used a month 1 code. Is the new code HMRC issued definitely 810L NOT month 1? In which case have you accidently left the month 1 box ticked? If this is the case, just untick the box and reprocess. If the code issued by HMRC is 810L month one then there's nothing you can do about it I'm afraid. The employee will need to speak to them and ask them to change it to a cumulative code.

ExcelAnt

This makes BUCKETS of sense to me thanks so much. We currently have several employees down as Month 1 codes

Will need a bit of questioning with the yee HMRC and sage payroll team, but hopefully the employee in question will get a nice Xmas bonus