Cumulative and Non-Cumulative (Week 1 / Month 1) Tax Basis: When to use them

Existing employees at start of tax year

At the start of each tax year, the PaySuite system will automatically apply a global uplift of any applicable tax codes following any changes to personal allowances advised by HMRC (generally, these are announced in Budget Speeches). Additionally, any existing employees that were on a week 1 / month 1 basis will be uplifted to a cumulative basis, as part of the uplift process from old tax year to new tax year.

New Starter joining on first pay cycle of New Tax Year

Any new starter that joins your payroll during the very first pay cycle of the tax year (i.e. Month 1 if monthly paid, Week 1 if weekly paid, Week 2 if 2-weekly paid or week 4 if 4-weekly paid), can be set up on a cumulative code, as because you are first paying them at the start of the tax year, you are not giving them tax allowances that they are not entitled to.

New Starter joining after first cycle of New Tax Year

Any new joiner that joins your payroll at any time after the first pay cycle should by default go onto a week 1 / month 1 non-cumulative tax basis. You should only change this to cumulative basis if:

  • They provide you with a valid P45 that has a previous cumulative basis on it
  • They provide you with a valid P46 / starter statement with the appropriate declaration (please see new starters section for further details)
  • You are advised to change the basis to cumulative by HMRC.

 

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