Sage Payroll Year end

Payroll New Year

1. Check you’ re using the correct version.

Before you start processing the new tax year, you must have installed the update for the 2026/27 tax year, V32.00.299 or V32.00.300.

2. Update your employees’ tax codes.

For the 2026/27 tax year, the personal allowance and emergency tax code remains the same at £25,570 and 1257L. This means you do not need to change your employees’ tax codes unless informed by HMRC.

You do however need to remove the week 1 / month 1 flag on any employees’ tax codes before processing in the new tax year.

3. Small employers’ relief

If you are eligible for Small Employers’ Relief (SER) (previous years gross National Insurance must be less than £45,000), you need to set your Sage Payroll to calculate and claim it.

1. Click Company then
2. Select the Eligible for Small Employers’ Relief
3. Click OK
4. Apply for Employment Allowance

TIP: make sure your process date is set to 6/04/2026 before completing this.

In the 2026/27 tax year the employment allowance remains as £10,500 for eligible employers to reduce their annual Employers National Insurance liability by up to £10,500.

Submit the Employer Payment Summary (EPS) for Employment Allowance

1. Click Company, then click Settings.
2. Select the Eligible for Employment Allowance check box and click Submit.

• Where this button is missing, you have already applied.
• If you need to submit another application, select Settings, then continue to Step 3.
• If you are ready to start claiming it in your software, skip to the enable Employment Allowance

3. Select Continue then Submit.
4. Select Submit again, then allow the submission to complete.
5. Print the submission log if required, then select Close.

At this stage, HMRC receives an EPS with Employment Allowance application.

• If your application is unsuccessful, you receive a notification in your IR Secure Mailbox within five working days.
• If you do not hear back from HMRC, then your application has been successful, and you can then select the Eligible for Employment Allowance check box within Company then Settings. Once you select this check box, your software is set up to calculate Employer Allowance.

Memo

If you select the Eligible for Employment Allowance check box after you have already processed one or more tax months, you must re-run your P32 for each month of the tax year starting from month 1. Sage 50 Payroll then calculated the Employment Allowance due in each period and records these values in Company Settings > HMRC Payments of your software.

6. Pensions module

If you use the pension module, when you process the first period of the new tax year, Sage prompts to check your pension contribution rates are correct.

Pensions Data Exchange

If you use the Pensions Data Exchange (PDX) to send data to your provider, there are some additional steps to complete at the start of the tax year, to make sure that the dates align etc.

5. New legislation for 2025/2025 tax year

There are a few changes to payroll legislation in the new tax year, including a change to the National Minimum Wage from 1 April and the most significant changes is to the rules on Statutory Sick Pay etc.

If you need help running your payroll year end routine or setting up for the new Payroll year or need any other help or advice with your payroll, please contact us

Sage 50 Accounts

You might want to add your own Chart of Accounts just to report on specific nominal codes.  You can have numerous Charts of Accounts.

Add a Chart of Account

1. Go to Nominal codes > then click Chart of accounts.
2. Click Add and enter a name for the new chart of accounts Add.
3. Add the nominal codes you wish to, in the chart of accounts, then click Save.
4. If you are not adding all your nominal codes to your chart of accounts, or you are going to come back and finish it later, you will get a warning message “Incomplete chart of accounts.” Click OK.

Note If you do not add all the nominal ranges, the chart shows as PARTIAL in the Chart of Accounts window after saving.

Edit

You can edit any chart of accounts.

1. Highlight the relevant chart of accounts and click Edit.
2. You can change the name of the chart of accounts and add more nominal codes or delete nominal codes, change the grouping of the nominal codes as required.
3. Click Save when finished.

Delete a chart of accounts

If you have a chart of accounts that you have created that you no longer need and want to delete it.

1. Highlight the relevant chart of accounts.
2. Click
3. Click Yes to confirm that you are sure you wish to delete the relevant chart of accounts.

Set a default chart of accounts

Sage uses the default chart of accounts to populate your reports automatically.  You can change this to suit your needs if you have set up your own chart of accounts layout.

1. Highlight the relevant chart of accounts.
2. Click Make Default then click OK.

If you would like help with creating, amending, or deleting a chart of accounts, or if you need any other help with your Sage 50 Accounts, please contact us

Benefits in Kind

A Benefit in Kind (BIK) is a notional payment, which increases you employee’s taxable pay without increasing their net pay.  You can also set a BIK payment as subject to NI if required.

As an employee’s taxable pay goes up, their PAYE Liability increases.  This reduces their net pay.  A common use of BIK is to calculate the tax due on a taxable benefit.  You can either produce a P11D after the Payroll year end to report your employee’s taxable benefits or you can register with HMRC to payroll the benefits.

Payrolling the Benefits in Sage 50 Payroll

Before you can process your benefits in Sage 50 Payroll you need to set up new pay elements for any BIKs and select the Benefit in Kind check box.

The benefit in kind payment increases the employee’s pay that’s subject to tax, and if applicable NI.

If you need to process Employer NI only on a benefit, do this through their P11D, Sage 50 Payroll can’t calculate employer only NI.

Setting up a new BIK

1. Click Company then click Pay Element.
2. Click New enter a description, for example, Medical Insurance.
3. Select the checkbox beside Benefits in Kind.
4. If the benefit is subject to NI, select the checkbox beside National Insurance.

Note – If you are not sure if your BIK is subject to NI, please contact us or HMRC for advice.

5. Click OK, then OK

If the BIK is subject to National Insurance, it can increase the loan contribution for employees paying a student loan.  This is due to student loan calculating as a percentage of employees’ NIable pay.

Adding the BIK to an employee’s record

1. Select the relevant employee.
2. Click Employee then click Employee Record.
3. Elick Employment tab, then click Pay Elements.
4. From the Payment Name drop-down list, choose the required payment.
5. Click OK.
6. If required, enter the relevant hours and rate.
7. To add another payment, move to the next line then repeat Steps 4, 5 and 6.
8. Click Save then click Close.

Add the same BIK to multiple employees

1. Select the required employee(s).
2. Click Tasks, then Global Changes.
3. Click Payments, then click Add Payment.
4. Select the required payments.
5. Click OK, click Yes, then click OK.

If you need help setting up a BIK pay element or adding a BIK pay element to an employee’s record or need any other help or advice with your payroll, please contact us

We can also provide a remote access service where we can link into your computer to help you resolve your Sage Accounts or Payroll problems.

Sage 50 Accounts – Chart of Accounts

When you run management accounts in Sage the Chart of Accounts categories your nominal codes.  This allows you to analyse your income, expenditure, assets, liabilities, and capital to assess your business performance.

The Chart of Accounts lists all the nominal codes and assigns them to these categories.  You can have multiple Chart of Accounts, depending on what information you want to show.

Nominal Codes

Sage uses nominal codes to track sales and purchases etc., such as insurance, or sales.  Each code has a unique code, which you can customise to fit your numbering scheme.  When you enter a transaction such as sales invoice or a bank payment you need to assign the relevant nominal code.

Default Layout of Accounts

When you first set up your company in Sage 50 Accounts, your nominal accounts and Chart of Accounts are based on the selected business type.  Business types include sole trader, partnership, limited company, or charity.

What does the Chart of Accounts consist of?

The Chart of Accounts has two sections – Profit and Loss and Balance Sheet

Depending on where a nominal code is included in the default Chart of Accounts decides on how that nominal code is treated when the yearend routine is run.  If a nominal code has been included in the Profit and Loss section, then code is totalled and a reversing entry is entered to bring the balance down to zero.  If the nominal code has been included in a Balance Sheet section, then total of the code is just rolled forward at the year end.

Profit and Loss

The Profit and Loss section is split into various categories, Sales, Purchases, Direct Expenses, Overheads and Taxation.  In each category you can have as many lines as you want splitting or grouping the nominal codes however you want them.  The nominal codes must run together to be grouped and you cannot include one code on another line that is part of a group or your accounts will not balance.

Balance Sheet

The Balance Sheet section again is split into different categories, Fixed Assets, Current Assets, Current Liabilities, Long Term Liabilities and Capital & Reserves.  In each category you can have as many lines as you want splitting or grouping the nominal codes however you want them.  The nominal codes must run together to be grouped and you cannot include one code on another line that is part of a group or your accounts will not balance.  In Current Assets you can have “Floating” Nominal Accounts, these are nominal codes that can be included in Current Assets or Current Liabilities depending on what the balances is e.g. bank accounts whether you are in credit or overdrawn, Sage will show the balance in the correct place i.e. in the Current Assets or Current Liabilities.