If an employee dies, you must process any outstanding pay due and record their passing in Sage 50 Payroll using the Leaver wizard.

You must also notify HMRC that the employee has died by sending a full payment submission after you make them a leaver.

Considerations

When you process the final pay for an employee or director who has died, you must consider the following:

• Earnings paid after the employee dies aren't subject to national insurance (NI) unless the employee is a director
• Earnings aren't subject to student loan or postgraduate loan deductions  
• Earnings of a director who dies, is still subject to NIC
• Earnings are subject to tax, which you should deduct using the normal tax code
• If the employee is a member of a pension scheme, you must contact the pension provider to check if you should deduct a pension contribution from the employee's final pay

Process the employee's final pay with no NI

The steps you need to follow to process the final payments are different if statutory payments are due.

Click the relevant link below to find out how more, of or if no statutory payments are due, continue from the steps under the change the employee's NI category heading below.  

• Statutory sick pay (SSP). Process an employee's final pay with statutory sick pay (SSP) >
• Statutory maternity pay (SMP), statutory paternity pay (SPP), shared parental pay (ShPP), statutory adoption pay (SAP) or statutory paternity pay (adoption) (SPP(A)). Process the final pay with statutory payments for an employee who has died >

Change the employee's NI Category

If no statutory payments are due to the employee, your first step is to change the NI category.

1. From the employee list, double-click the relevant employee.
2. Click the Employment tab, from the NI Category drop-down, select X.
3. Click OK, then click Save.
4. Click OK, then Close.

Process a payment without NI liability

Next, process their payments.

1. Select the relevant employee.
2. Click Payroll, then click Enter Payments.
3. Enter the required value as normal.
4. Change the Hours/No for any other unused payments to zero.
5. Select the Select this check box if your employee is leaving and this is their final payment check box.
6. Continue to process any other employees.
7. Click Save/Next, then click Close.
8. If required, print any pre-update reports.
9. Check that the required employee is selected.
10. Click Update Records.
11. Click Yes, then click Next.
12. If applicable, post the nominal link.

Make the employee a leaver and notify HMRC

NOTE: Before carrying out this process, ensure your records are updated.

1. Select the required employee.
2. Click Employee, then click Leaver.
3. Click Next then, in the Leaving Date box, enter the employee's date of death.
4. Select the Deceased check box.
   When you select this check box, HMRC is notified that the employee is deceased when you submit the next FPS.
5. Click Finish.

You can now submit the Full Payment Submission (FPS). This FPS updates HMRC's record for this individual as deceased. 

Process extra pay

If you need to make an extra payment to an employee who has died after you submit your FPS, you must decide when you will make the additional payment. Read more