The tax and national insurance details contain all the details required for the calculation and reporting of an employees national insurance, PAYE, directorship periods and student loans.
You can update the employee's tax and national insurance details by navigating to employee file > Tax and NI details
The Tax and NI details page is split into two sections
National insurance details
Important information on this page includes:
- Payroll id: This is the same as what HMRC call employees "Works/Payroll no". It is what gets sent through to HMRC but, if you don’t supply a value, the system will send the software generated id.
- Employee Statement: Here you can edit if this is the only job on or before the 5th April, after the 5th April or more than one income.
- Tax code: The tax code is used to work out how much Income Tax to take from pay or pension. HM Revenue and Customs (HMRC) will tell you which code to use to collect the right tax. The tax code will normally start with a number and end with a letter.
- Use w1/m1: If you do not pay your employee on a cumulative basis but a week one/month one (w1/m1) then you need to tick this box
- Student Loan: Tick the box if the employee has a student loan.
- National Insurance Number: You have a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only. It’s made up of letters and numbers and never changes. If when your employee started employment and they didn't know their NI number you can add it in here or if it was entered in incorrectly it can be edited here.
- National Insurance Category: Employers use an employee’s national insurance category letter when they run payroll to work out how much they both need to contribute.
***NOTE - The default national insurance category for employees under 21 is category M. When an employee turns 21, their national insurance category will be updated to be A automatically within the pay run.
- Is Company Director: Please tick this box if the employee is a company director.
- Seconded Employee: If the employee is seconded you should tick this box. This article will assist you with further information with regard to seconded employees.
Click 'Save' when finished.
The Previous Employer (P45) section of this screen is to be filled using the amounts from the employee's previous employer and apply to the current financial year. The employee's default location will be used for reporting purposes.
You can enter the following previous employer information:
- Employer PAYE reference
- Tax code at leaving date (and if the W1/M1 calculation method was used)
- If student loan deductions should continue
- Last pay period
- Total pay to date
- Total tax paid to date
If the employee was not being paid using a W1M1 tax code, then you'll be able to check the PAYE calculation based on the supplied P45 information. You can click the 'Check' button to validate the PAYE values.
When you have entered these figures and you are happy with them then you need to press 'Save'.
If you have any questions or feedback, please let us know via firstname.lastname@example.org