When hiring a new employee, one of the things you will need to establish is the correct tax code to put them on.

This information can come to you in a number of different ways, either on their P45 from their previous employer, or by filling out a P46/New Starter checklist as found on the EnrolPay Small Payroll software when you are creating a new employee.

If you have an employee's P45, the tax code that they were on when they finished their last employment should be used.

Depending on the declarations made in the P46/New Starter checklist, a tax code will be assigned to the employee automatically.

If however your employee is unable to provide you with their tax code information -for example if they are still currently working for another employer it is important that you do not use the same tax code for multiple employments. If you do this your employee will not pay enough tax and will end up with a bill at the end of the year or a tax code readjustment to pay the money back

In this case, use a tax code of 0T. Once you have submitted your first RTI submission HMRC will be notified that this employee now works for you and you should be issued with a tax code change notification.

NEVER change a tax code without an official EMPLOYER communication from HMRC - Communications sent directly to an Employee from HMRC do not stipulate if the tax code is cumulative or on W1/M1 basis so should not be used under any circumstances.