SDWorx-Pay – Tax

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TAX

These are the SDWorx-Pay tax data items:

NameEngine code
Tax codeT000
Tax basisT010
Predetermined tax this payrun onlyT020
Predetermined tax refund this payrun onlyT030
Tax period replacementT040
Taxable pay in previous employmentT050
Tax in previous employmentT060
Taxable pay to-dateT078
Tax to-dateT088
Tax-free payT090

SDWorx-Pay lets you manage an employee’s tax in the following ways by:

  • Entering the employee’s tax code and tax basis (including tax codes for Scotland and Wales).
  • Manually determining the amount of tax to be paid for this pay cycle only, by specifying a fixed amount to be taken as tax and/or an additional amount of tax to be paid.
  • Specifying the taxable pay and tax paid, both to date and for the employee’s previous employment.
  • Manually determining the amount of tax refund for this pay cycle only.
  • Replacing the period on which the amount of tax is calculated.

At company set-up time, indicators can be set such that:

  • If zero tax is calculated for an employee, Payroll Active prints the message ZERO TAX CALCULATED THIS TIME on the Exception Report.
  • No tax calculations are performed if there is zero taxable pay. In this case, tax for this pay period is set to zero, the payslip shows zero tax, and tax totals are not updated. It also means that tax refunds cannot be calculated nor paid.

SIGNED INPUT

You can enter positive or negative cash amounts against some of the tax payroll items, by preceding the amount with a positive or negative sign. If you enter no sign, a positive amount is assumed. The exceptions are:

  • Tax code/T000
  • Tax basis/T010
  • Tax period replacement/T040

Note that the effect of entering a negative amount against:

  • Pre-determined tax/T020
  • Pre-determined tax refund/T030

is to reverse the effect; that is, an increase becomes a decrease, and a decrease becomes an increase.

Note:

The following reports and documents can be affected as a result of calculating tax:

  • Input Error Report
    • Exception Report
    • Amendment Report
    • EOY Reconciliation
    • Financial Summary
    • Cost Analysis

See

  • EMPLOYEE,
    • for information about employees receiving payments after leaving.
    • for information about how the number of periods over which statutory deductions are calculated can be overridden at employee level.
  • PENSIONS, for information about pension schemes being eligible for inclusion in the Net Pay scheme, and therefore qualify for tax relief.

TAX PAYROLL ITEMS

TAX CODET000

Use T000 to enter the employee’s tax code. Format 1

nnnnnnn, followed by L, M, N, or T, where nnnnnnn consists of up to 7 numeric characters.

Example 1

The employee’s tax code is 1257L:

T000 1257L

Example 2

The employee has no tax free pay:

T000 0T Format 2

BR, or NT, followed by blanks.

Example 1

The employee’s tax code is BR:

T000 BR

Example 2

The employee is a new student with a tax code of NT and tax basis of S (see Tax basis/ T010):

T000 NT

Format 3

D followed by 1 numeric character in the range 0-9.

Example

The employee’s tax code is D0 (signifying that all earnings are to be taxed at the higher rate):

T000 D0

Format 4

K followed by 1-5 numeric characters in the range 1-99999.

Example

The employee’stax code is K443 (signifying that an additional amount of earnings represented by 443 is subject to tax):

T000 K443

Note:

  • SDWorx-Pay accepts tax codes with the devolved government taxation prefixes C for Wales and S for Scotland
  • If you leave the field blank (which would be user error), SDWorx will apply a once-off emergency tax code of 0T, on a week 1/month 1 basis. The employee’s record will not be updated as the user has failed to apply a valid tax code.

To change the tax code, simply enter the new code.

For employees that have left, you can specify that the leaver can receive a regular or irregular payment after leaving (see Employee status marker/E001). For these employees, SDWorx-Pay automatically sets the tax code to 0T and the tax basis to 1.

TAX BASIST010

Use T010 to enter the employee’s tax basis.

Format

Enter one of the following tax basis codes:

  • 1 : if the employee’s tax code is to be calculated on a month 1 or week 1 basis.
  • F : if the employee is on a fixed tax basis.
  • X : if the employee is not to be included in reporting to HMRC.
  • or enter 0 or leave blank to specify a cumulative tax basis.

Example

The employee’s tax code held against T000 operates on a month 1 or week 1 basis. T010 1

Note:

  • If you change the tax code against T000 whilst the tax basis is 1, Payroll Active resets T010 to blank.
  • If you change the tax code against Tax code/T000 whilst the tax basis is F or X, SDWorx-Pay does not reset T010 to blank. Enter 0 to clear T010.
  • Enter X to ensure that tax calculations are not performed; the record is excluded from the end-of-year tax information.
  • Enter F to ensure than an amount entered against Tax free pay/T090 will be the fixed amount of tax deducted each payrun.
  • For employees that have left, you can specify that the leaver can receive a regular or irregular payment after leaving (see Employee status marker/E001). For these employees, Payroll Active sets the tax basis to 1 and the tax code to 0T.
PREDETERMINED TAXT020

Use T020 to enter an amount of tax to be deducted for this payrun only.

Format ppppppppppp

Where ppppppppppp is the amount of tax, in pence, up to 11 numeric characters.

Example

The amount of tax to be deducted is £37.50: T020 3750 Note:

  • The amount of tax is deducted for this payrun only.
  • The tax paid to-date (held against Tax to-date/T088) is automatically increased by the amount.
PREDETERMINED TAX REFUNDT030

Use T030 to enter or replace a tax refund to be paid for this payrun only.

Format ppppppppppp

Where ppppppppppp is the amount of tax, in pence, up to 11 numeric characters.

Example

The tax refund to be paid is £7.75: T030 775 Note:

  • The tax refund is paid for this payrun only, and no tax is deducted.
  • The tax paid to-date (held against Tax to-date/T088) is automatically decreased by the amount.
TAX PERIOD REPLACEMENTT040

Use T040 to replace the tax period that the employee was last processed.

Format nn

Where nn is the new tax period, and is 01 to 12 for companies whose pay frequency is monthly, and 01 to 53 for all other pay frequencies.

Example

The employee’s tax period has been changed to 30:

T040 30

Note:

  • Do not use T040 to enter a tax period in the next tax year.
  • SDWorx-Pay automatically updates T040 each time the employee is processed. It also holds the advanced tax period resulting from entering a holiday pay request. For example, if you enter a holiday pay request using Holiday balance or value to be paid/H012 in tax period 26, the employee is to receive 3 weeks pay and Payroll Active immediately sets the tax period held in T040 to 28. This means that the employee will not be paid again until tax period 29.
  • Typically you would replace the value against T040 if the employee decides not to take the holiday and returns to work the following week. Using the example above, on the next payrun change T040 from 28 to 26. SDWorx-Pay then pays the employee for tax period 27.
  • If the employee’s tax period is equal to or greater than the payrun tax period, the employee will not be paid.
  • At the end of year, SDWorx-Pay subtracts either 52 or 53 (depending on the company calendar specified at company set-up time) from the value held in T040, making it 00 for the start of the new tax year. Employees will then be paid in tax period 01 (unless holidays are requested).
TAXABLE PAY IN PREVIOUS EMPLOYMENTT050

Use T050 to enter the employee’s taxable pay in any previous employment.

Format ppppppppppp

Where ppppppppppp is the taxable pay, in pence, up to 11 numeric characters.

Example

The employee’s taxable pay in previous employment is £16750.00: T050 1675000 Note:

  • Take the taxable pay in previous employment from the employee’s P45 form. If it is unavailable, leave blank.
  • SDWorx-Pay automatically adds the contents of T050 to Taxable pay to-date/T078.
  • Take care if you replace the contents of Taxable pay to-date/T078 in the same payrun as T050 (that is, specifying taxable pay to date and taxable pay in previous employment in the same payrun). For example, if you enter:
    • £3500.00 taxable pay in previous employment, then
    • £3200.00 taxable pay to date

SDWorx-Pay will accept £3500.00 and update Taxable pay to-date/T078 with that amount. SDWorx-Pay then accepts £3200.00 and replaces the taxable pay to date with the new amount. The Financial Summary will then be inconsistent (that is, the amount in  Taxable pay to-date/T078 would be less than in T050). In this case, Payroll Active prints WARNING – D/CODE T050 VALUE GREATER THAN D/CODE T078 on the Exception Report.

  • Use Tax in previous employment/T060 to enter the tax paid in previous employment.
  • UseTax to-date/T088 to replace tax paid to date.
TAX IN PREVIOUS EMPLOYMENTT060

Use T060 to enter the employee’s tax paid in any previous employment.

Format ppppppppppp

Where ppppppppppp is the tax paid, in pence, up to 11 numeric characters.

Example

The employee’s tax paid in previous employment is £2570.00: T060 257000 Note:

  • Take the tax paid in previous employment from the employee’s P45 form. If it is unavailable, leave blank.
  • SDWorx-Pay automatically adds the contents of T060 to Tax to-date/T088.
  • Take care if you replace the contents of Tax to-date/T088 in the same payrun as T060

(that is, specifying tax paid to date and tax paid in previous employment in the same payrun). For example, if you enter:

  • £350.00 tax paid in previous employment, then
  • £320.00 tax paid to-date

SDWorx-Pay will accept £350.00 and updates Tax to-date/T088 with that amount. SDWorx.Pay then accepts £320.00 and replaces the tax paid to-date with the new amount. In this case, SDWorx-Pay issues WARNING – D/CODE T060 VALUE GREATER THAN D/CODE T088 on the Exception Report.

  • Use Taxable pay in previous employment/T050 to enter the taxable pay in previous employment.
  • Use Taxable pay to-date/T078 to replace taxable pay to date
TAXABLE PAY TO-DATET078

.

Use T078 to replace the employee’s taxable pay to-date.

Format ppppppppppp

Where ppppppppppp is the taxable pay, in pence, up to 11 numeric characters.

Example

The employee’s taxable pay to date is £14535.00: T078 1453500

Note:

  • T078 can hold the pay calculated by the present employer. If the employee’s P45 is available, taxable pay to-date can be the amount taken from the P45 plus the amount calculated by the present employer.
  • You must take into account the employee’s pension contributions if the pension is eligible for inclusion in the Net Pay arrangement. For example, if the employee’s gross pay is £475.00 and contributions to a Net Pay Scheme pension is £25.00, then the taxable amount you enter against T078 is £450.00. If the pension is not in the Net Pay Scheme, enter £475.00.
  • Use Tax to-date/T088 to enter the tax paid to-date.
  • Use Taxable pay in previous employment/T050 and Tax in previous employment/T060 to enter previous taxable earnings and previous tax paid to-date.
TAX TO-DATET088

Use T088 to enter the employee’s tax paid to-date.

Format ppppppppppp

Where ppppppppppp is the tax paid, in pence, up to 11 numeric characters.

Example

The employee’s tax paid to date is £425.80:

T088 42580

Note:

  • T088 can hold the tax paid calculated by the present employer. If the employee’s P45  is available, tax paid can be the amount taken from the P45 plus the amount calculated by the present employer.
  • Use Taxable pay to-date/T078 to enter the taxable pay to-date.
  • Use Taxable pay in previous employment/T050 and Tax in previous employment/T060 to enter previous taxable earnings and previous tax paid to-date.
  • T088 is updated as a result of tax refunds.
TAX-FREE PAYT090

Use T090 to enter a tax-free pay or fixed tax amount.

Format ppppppppppp

Where ppppppppppp is the tax-free pay or fixed tax amount, in pence, up to 11 numeric characters.

Example

The employee’s tax-free pay is £3850.00:

T090 385000

Note:

  • If you enter an amount against T090, its use in tax calculations depends on the tax basis held against Tax basis/T010:
    • If the tax basis is blank, the amount is used as tax-free pay on a cumulative basis; that is, it is multiplied by the current tax week or month.
    • If the tax basis is 1, the amount is used as free pay, but on a month 1 or week 1 basis.
    • If the tax basis is F, the amount is used as the amount of tax to be deducted each payrun.
    • If the tax basis is X, Payroll Active ignores the amount.
  • Replace the amount by entering a new amount.
  • There must never be more than one week’s or month’s free pay held against T090. This applies also to fortnightly and lunar payrolls.
  • The amount against T090 will normally be blank, so allowing tax to be calculated in accordance with the Inland Revenue tax tables.
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Student and Postgraduate Loans
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Last updated 28/6/2022 (PSP)