SAGE Payroll

How to Change an Employee’s tax code manually

If HMRC sends you a P9 or P6 notification to change an employee’s tax code, you need to apply it in your software.

When the tax code notice has an X after the code, this means you need to set the week1/month1 flag.

NOTE: if you are not certain what tax code to use for an employee, contact HMRC for advice.

There are different steps depending on when the tax code is effective from.

Tax code effective immediately

1. Select Payroll in the bottom left.
2. Double-click the required employee on your employee list.
3. Go to the Employment
4. Enter the new tax code in the Tax Code
5. If applicable, select the Week1/Month 1 Basis
6. Select Save then Close.

Your software uses the tax code you entered from the next pay period you process.

Tax code effective from a future date

1. Select Payroll in the bottom left.
2. Double-click the required employee on your employee list.
3. Go to the Employment
4. Select the + button beside the Tax Code
5. Enter the details

• Tax Code – enter the new code in this field.
• Week1/Month 1 Basis – Select this checkbox if the new tax code is on a week1/month1 basis.
• Effective From – enter the date the new tax code is effective from.

6. Select OK then Close.

Your software automatically applies the new tax code in the correct pay period.

This occurs in the first period where your Process date is on or after the tax code Effective from date that you entered above.

If you would like help with entering a tax code 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

Activating Sage Copilot

Note: Users receive Copilot access individually, and Copilot accesses only the same data as the user can access.

1. Download and install the latest version of Sage 50 accounts if you have not already.
2. Log in as Manager.
3. Select the Sage Copilot button, anywhere you see it in your software. In v32.0 and below, this is called Copilot insights.

TIP: In V32.1 and above, click Activate Sage Copilot in the software home page, or on the Help banner at the top of the modules.

4. Select connect now on the Connect your company to get started with the Sage Copilot window.
5. Follow the prompts to connect your company to your Sage account, if required.
6. If you have multiple Sage users, you are prompted to enter their name and email address. If Manager is the only user, just click Activate Sage Copilot on the window in step 10.

TIP: Select remove from list to hide usernames of people who have left the business, or that exist only to use third-party software.

7. After entering all user details, select
8. On the Grant Sage Copilot access window, select which user will have access to Copilot in the dropdown:

NOTE: This grants access to the first Copilot user. If you have multiple Copilot users on your licence, you can edit the user to add access later.

9. Press
10. Click Activate Sage Copilot on the Activate Sage Copilot Step 3 of 3 window.

NOTE:  After enabling Copilot, all users will need to sign in to Sage 50 Accounts using their Sage account, even users who don’t use Copilot.

If you would like help setting up Sage Copilot or any other help with your Sage 50 Accounts, please contact us

SAGE Payroll

Correcting errors in a previous tax year

If you notice an error in the previous tax year, you will need to fix it.

Backup your data

Before you start to do anything, it is important to back up your data.

Print historical payslips

Print historical payslips (unless you have already got copies) to ensure you have details of the original payment for all the periods you need to reprocess. This will help you later in the Enter the correct pay section.

Rollback

If you process any payments in the new tax, use the rollback on these payments first. Once you remove these payments with rollback, you can continue to rollback payments in the previous tax year.

Set the process date to the prior tax year and follow the rollback process until you are back to the period you need to amend.

Note: During the rollbacks, a message sometimes asks if you want to clear year to date values. Select No on this message if it appears.

Reprocess the prior tax year

Process the correct pay for the employee(s) as normal, starting from the earliest period you need to reprocess. The reprocess each period back to the date for the prior tax year.

You can use the historical payslips that you printed earlier. Make sure that you print your normal reports, including the payslips and then update records for each period.

If you normally post the nominal link to Sage 50 Accounts, correct salary journals to Sage Accounts after you update the records.

Notify HMRC of the changes

To let HMRC know of the changes, submit an adjustment to HMRC for a previous Tax year.

Note: Submit the amendment to HMRC before you start reprocessing in the next tax year.

Updating tax codes

Before you start reprocessing in the next tax year, check your employee’s tax codes are correct. If required, update your employees’ tax codes.

Submit an EPS for a previous tax year

To inform HMRC of values that are not in the full payment submission (FPS), submit an employer payment summary (EPS) for a previous tax year.

If you would like help correcting a problem in a prior tax year 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

Setting up Making Tax Digital for Income Tax for Sole Traders

Note: This is just for sole traders and not for Landlords

1. Log in to Sage 50 Accounts as Manager.
2. If you are not already using connected service, go to Apps and add-ons and select learn more in the MTD for Income Tax tile.
3. Press Get Started.

If you are already using connected services, you can open from Connected services then MTD for income tax.

You will then see ‘Set up Making Tax Digital for income tax’ window.

4. Select Connect company to a Sage Account.

This opens the ‘Connect your company to a Sage account’ window.

5. Enter your name then press Continue.
6. Enter your company details then press Continue.
7. Log in with your Sage account email address. Use the Sage account who is the account owner.

You will see a message ‘Great news, you’re connected’ with your company name and Sage Account email.

8. Press Continue.
9. Select the relevant option from:

• Sign up on HMRC – Select this option to sign up to MTD for Income Tax on GOV.UK.
• I’m signed up – continue setup – select this option if you have already signed up to MTD for Income Tax.

Once you have signed up, the next step is to authorise Sage to share updates with HMRC. You can then submit your quarterly submission values.

10. Press Authorise with HMRC.

NOTE: You will need your Government Gateway login details and your National Insurance number.

11. Press Continue on the ‘Allow your software to connect to HMRC’ window.

The ‘What you will need’ window appears.

12. Press Sign in to the HMRC online service.
13. Enter your HMRC credentials, then press Sign in.
14. Choose Give permission on the ‘Allow your software to connect with HMRC’ window.
15. Enter you National Insurance number on the ‘Find your business’ window then press Continue.
16. Select the correct business then press Continue.

The Business overview displays your company information.

17. Press Confirm and complete setup.

TIP: you can change the Update period in the Making Tax Digital for Income Tax Settings Window.

Now you have set up MTD for Income Tax, you will see new options in the software:

• MTD for Income Tax settings option in Connected services
• Assign Income Tax categories in Nominal Codes.
• Submit quarterly update in Nominal Codes.

Assigning Income Tax categories for Making Tax Digital (MTD) Sage 50 accounts V33.1 and above

You need to set income tax categories on the Profit and Loss nominal codes so you can send you MTD for Income Tax Quarterly updates.

When you submit your quarterly update, you will see two sections, Business income, and Business expenses.

The categories in the Assign Nominal Codes to Income tax Categories window relate to the areas in your Chart of Accounts.

These are:

• Sales
• Purchases
• Direct Expenses
• Overheads
• Taxation

1. Log in to Sage 50 Accounts as Manager or as a user with full access to the Nominal codes module.
2. Go the Nominal codes then select Assign Income Tax categories.
3. Select the relevant category in the Income tax category dropdown against code Name.

In Sage 50 accounts V34 and above, you can use the Search function to narrow down the list of categories on this window.

4. Select Save once you have assigned your categories.

Note: When you assign the tax categories to your Profit and Loss codes, the software assigns them to all relevant existing transactions.

If you would like help setting up MTD for Income Tax or assigning tax categories to your Profit and Loss Account or any other help with your Sage 50 Accounts, please contact us