Starting the tax year

Since 6 April 2013 employers have been reporting PAYE information to HM Revenue & Customs (HMRC) in real time. You may see this referred to as Real Time Information - or RTI.

This means you must set up payroll records for the new tax year using payroll software, some of which is free.

If you use a manual payroll system, you will need to transfer this information on to payroll software to enable you to report your payroll information to HMRC electronically.

You need to keep these records up-to-date with any changes to tax codes, Income Tax and National Insurance contributions (NICs) rates.

On this page:

Important news and updates

From 6 March 2014, you may be able to file a Full Payment Submission (FPS) or an Employer Payment Summary (EPS) to report PAYE information relating to payments for the tax year commencing 6 April 2014 (2014-15). If you want to do this, please ask your software provider whether they have included this functionality. If you use HMRC's Basic PAYE Tools, you will be able to do this from 3 April 2014 when the 2014-15 version will be available.

HMRC has announced that existing employers with nine or fewer employees, who need more time to adapt, can report PAYE information on or before the last payday in the month until April 2016. This means that micro employers who are still finding it difficult to report PAYE information on or before the date they pay their employees will have more time to adapt to reporting in real time. HMRC recommends employers change their processes and their arrangements as soon as they can to ensure they’re ready for full real time reporting in time for April 2016.

If you think you will benefit from this, see HMRC's guidance 'Relaxation of reporting arrangements for small businesses with fewer than 50 employees'.

Relaxation of reporting arrangements for small businesses with fewer than 50 employees

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Payroll records - starting 2014-15

You must set up payroll records for all employees you pay during the tax year. Your records must include all employees, no matter how much you pay them, even those earning below £111 per week (NICs Lower Earnings Limit 2014-15) or those paid just once a year.

You must include any employee who has left since 6 April but before you had chance to transfer their payroll records across.

Setting up your payroll records

If you are setting up a new payroll system, perhaps because you are transferring your payroll from a manual or in house system onto your software, please make sure you accurately transfer personnel details. It's important that the information you provide on payroll reports is accurate - if it's wrong it will cause you and HMRC problems, and your employees may be affected too.

Transferring your payroll records

If you are using commercial payroll software make sure you follow your software provider's guidance because it's important that the information you start the tax year with is accurate ready for your first report - if it's wrong it will cause you and HMRC problems, and your employees may be affected too.

If you use HMRC's Basic PAYE Tools the 2014-15 payroll has been provided as an update to the existing software rather than a separate download. This means that you do not need to transfer your database as you have done in previous years. To check for the update:

  • open the Basic PAYE Tools
  • select 'Settings
  • select 'Update'
  • select 'Check now'

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Income Tax, National Insurance and student loan rate changes

Updating your payroll software with rate changes

As well as making sure you have RTI enabled software you need to update your payroll software to reflect rate changes that apply from 6 April 2014.

If you use commercial software your supplier sends you software updates for rate changes.

If you use (or are going to start using) HMRC's Basic PAYE Tools, the 2014-15 version has been provided as an update to the existing software rather than a separate download. This means that you do not need to transfer your database as you have done in previous years. To check for the update:

  • open the Basic PAYE Tools
  • select 'Settings
  • select 'Update'
  • select 'Check now'

If you are thinking about starting to use HMRC's Basic PAYE Tools you can find out more by following the link below.

Using HMRC's Basic PAYE Tools

Summary of rate changes

After 6 April 2014, you must ensure that your payroll calculations for Income Tax and NICs are done using the 2014-15 rates and thresholds. The rates and thresholds for 2014-15 can be found by following the link below.

Rates and thresholds for employers

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Tax code changes

How you find out about tax code changes

Most employers receive notices about tax code changes online instead of in the post. You receive email alerts each time HMRC sends you a new tax code.

You can access the tax codes that HMRC sends you online by either:

  • logging into PAYE Online and choosing the 'tax code notices' option
  • using the PAYE Desktop Viewer (PDV)

Your payroll software may let you read or process these notices directly.

PDV is an application you can download and install from the HMRC website. It's useful if you're expecting to receive lots of tax code and other notices from HMRC.

Using HMRC's PAYE Desktop Viewer

If you opted out of receiving tax code changes online then you will get them by post if there are any for your employees. You can always opt back into receiving them online.

Standard new year tax code change - Form P9X

Form P9X tells you about the tax codes you need to use from 6 April due to changes in Income Tax and NICs rates.

You use the code on form P9X, along with the employee's tax code from the previous tax year's payroll record, if HMRC hasn't sent you a new tax year code for that employee.

Form P9X - Tax codes to use from 6 April 2014

Employee new year tax code change - Form P9(T)

Form P9(T) tells you if an individual employee's tax code changes from 6 April. You won't get a P9(T) for each employee - only those you need to use a new code for.

Employee in-year tax code - Form P6

Form P6 tells you if an individual employee's tax code changes after the start of the tax year.

If you receive an in-year tax code but it arrived too late for you to use in the last tax year, you can use the in-year tax code for the new tax year.

Tax code changes following the Budget - Form P7X

Form P7X tells you about changes to tax codes due to changes in Income Tax and NICs rates following the Budget.

If you receive a tax code late

You should contact HMRC to find out what tax code to use if you receive a tax code after the date you are required to use it from.

How you apply a new tax code

If you're using commercial payroll software or HMRC's Basic PAYE tools you follow the instructions on your tax code form to update employee records.

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More useful links

Find contact details for HMRC's Employer Helpline

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