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Manage an employee's tax and national insurance (NI)

Updated

Available for the following plans: Lite, Plus, Essentials, Engage, Elite, Unlimited 
Available for the following HR classic plans: Standard, Premium, Platinum
Available for the following Payroll classic plans: Essentials, Standard, Premium
Available for the following user access levels: Admin

National Insurance, which is often abbreviated to NI (or NIC, National Insurance Contribution or NINO), is money that is paid to His Majesty's Revenue and Customs (HMRC) by employers, employees, and those who are self-employed. It remains a Government Scheme and anyone working in the UK earning over a set threshold must pay into the scheme.

The Tax and National Insurance feature within the Employee File module changes depending on whether you have a connection to one of our payroll offerings or you have an HR classic platform. If you have no connection to a payroll classic platform, then you can use this feature to edit your employees' tax and national insurance details. For Payroll classic customers it is split into 2 sections: National Insurance Details, and Previous Employer.

If you have connected Employment Hero to a payroll platform, the Tax and NI page is read-only with the details stored and managed via your payroll platform. An administrator or the employee must complete this screen during onboarding to make sure the first sync to payroll occurs and then the screen will become read-only thereafter. (For troubleshooting guidance on synchronisation and employee access during the onboarding process, refer to the Troubleshooting section.)

Daily activities

  Select the payroll platform you integrated with for the relevant instructions. If you do not have an integrated payroll classic product, click the HR classic tab.

HR classic EH Payroll classic Xero
Update tax and NI details
  1. Click the   People menu.
  2. Click the People list submenu.
  3. Select the employee that needs their details updated.
  4. Click the Tax and NI Details tab.
  5. Complete the following fields in the Tax and NI Details section:
    • Do you have a P45 form?
    • Employee statement.
    • This employee has previously been reported
    • Tax code:
      • Use W1/M1.
    • Has a student loan:
      • Student loan type:
        • Plan 1.
        • Plan 2.
    • Has post grad load.
  6. Complete the following fields in the National Insurance Details section:
    • National insurance number (NINO) - with no spaces.
    • National insurance category:
      • Category A - Standard rate (most employees).
      • Category B - Reduced rate (females only, married/widows).
      • Category C - Pensioners (employees over state pension age).
      • Category H - Apprenticeships for U25.
      • Category J - Deferred rate (employee has another job).
      • Category M - Standard rate for U21.
      • Category Z - Deferred rate for U21 (Employee has another job).
    • Company directory.
  7. Complete the following fields in the previous Employer (P45) section:
    • Employee PAYE reference:
      • Office number.
      • Reference number.
    • Leave date.
    • Student loan deduction to continue.
    • Tax code at leaving date:
      • W1/M1.
    • Last entries on the P11 deductions working sheet.
    • Total pay date.
    • Total pay to date.
  8. Click the Save button.
     

Troubleshooting

Employee stuck on tax and NI onboarding

If an employee is stuck while trying to complete their onboarding for tax and NI (national insurance) purposes, this may be because their profile is synced with the Payroll classic platform. This can lead to their page having greyed-out fields.

If this problem occurs, try the following steps:

  1. Click People on the main menu.
  2. Click People list on the submenu.
  3. Click the employee's name.
  4. Scroll down to the Pay & compensation
  5. Select the Pay details tab.

  6. On the Pay run details panel, click the edit button (pencil icon).

    Helpful Hint

    If you want to see the pay run details before editing them, click the downward arrow (⌄) on the Pay run details panel.

  7. On the Pay run details popup, untick the Synchronise with payroll? checkbox.
  8. Click the Save button. (The Pay run details popup will close.)
  9. Ask the employee to complete the tax onboarding process and await their confirmation of completion.
  10. On the Pay run details panel, click the edit button (pencil icon).
  11. Tick the Synchronise with payroll? checkbox.
  12. Click the Save button.
  13. The information saved by the employee during their tax and NI onboarding process should now be successfully updated and synced.
If your employee has multiple P45s

  1. If your employee has multiple P45s (e.g., from more than one previous employment), you can add them by selecting "Add additional P45" located directly underneath the main P45 section. The system will combine the previous pay and tax figures with their existing totals but the tax code from the first P45 will remain active. p45 8.jpg

    p45 7 (1).jpg
  2. Once the pay run is finalised, any P6 notice received from HMRC will appear on the employee's Tax & NI screen, indicating that it has overwritten the original P45 figures. p45 purple.jpg
  3. Entering a P45 after a P6 will trigger a notification showing that the P45 figures have now replaced the P6 figures. p45 5.jpg
  4. To verify which previous pay and tax figures the system is currently using, you can also check the employee's YTD screen. A note under each entry will indicate whether the data originated from a P6 or a P45. p45 opening balances.jpg
  5. Check the tax code history to see its origin (e.g., P9, P6, P45, or manual change). If the tax code was updated manually, the source field will be blank. p45 2.jpg
  6. In the HMRC Inbox report it now shows if a P6 has been superseded. p45 1.jpg

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