Setting Up Payroll in SAGE Monthly vs Annual Clients

Monthly Setup (Default Approach)

Pros:

• Tax rebates are automatically reimbursed by HMRC on a monthly basis.
• Additional income payments can be made later in the tax year without requiring a second payroll record.

Cons:

• Only one-twelfth of the personal allowance is applied.
• Payslips will reflect a ‘monthly’ payment structure.

This setup is ideal for clients who may receive more than one payment within the tax year. It ensures automatic tax refunds once the correct tax code is received and avoids the need for manual claims via HMRC.

Annual Setup (Adviser Request Only)

Pros:

• The full personal allowance is applied to the one-off payment.

Cons:

• No automatic tax rebate – clients must submit a P55 to HMRC to reclaim overpaid tax.
• If another payment is made in the same tax year, it will trigger a second payroll record and a new tax code (typically BR or D0).
• Payslips will reflect an ‘annual’ payment structure.

This setup is suitable only for clients receiving a single payment in the tax year. Advisers must request this setup explicitly via ticket before the first payment is made.

Important Note:

Regardless of setup, to avoid emergency tax, we require either a P45 or a New Starter Checklist. If a client is transferring in from another provider and their previous scheme hasn’t closed payroll, a second tax code may apply.

Until we transition to Equisoft, our default setup for all ad-hoc income payments processed via SAGE will remain monthly. However, we are happy to accommodate an annual setup if requested prior to the first payment.