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

Notify HMRC that the employee has died by sending a full payment submission (FPS) after you make them a leaver.

Considerations

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

• Earnings paid after the employee dies aren't subject to national insurance (NI) unless they're a director
   TIP: For more information, go to Gov.UK. 
• If the employee is a director, their earnings are still subject to NIC
• Earnings are subject to tax, deduct this using the normal tax code
• If the employee has a pension, check whether to deduct this from their final pay with the pension provider
• Earnings aren't subject to student loan or postgraduate loan deductions
   TIP: For more information, go to Gov.UK. 

Statutory payments

The steps you need to follow depend on whether any statutory payments are due.

Click the relevant link below to find out more. If no statutory payments are due, continue from the process the employee's final pay with no NI section.  

• Process an employee's final pay with statutory sick pay (SSP)
• Process the final pay with statutory payments for an employee who has died

Process the employee's final pay with no NI

Your first step is to change the employee's 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 checkbox beside Select this check box if your employee is leaving and this is their final payment.
6. Continue to process any other employees.
7. Click Save/Next, then click Close.
8. If required, print any pre-update reports.
9. Click Update Records.
10. Click Yes, then click Next.
11. If applicable, post the nominal link.

Make the employee a leaver and notify HMRC

Check you've updated records before you complete the steps below.

1. Select the required employee.
2. Click Employee, then click Leaver.
3. Click Next then enter the employee's date of death in the Leaving Date field.
4. Select the Deceased check box.
    NOTE: When you select this checkbox, your next FPS notifies HMRC that the employee has died. 
5. Click Finish.

You can now submit the FPS as normal. This updates the status on HMRC's record for this individual as deceased. 

Process extra pay

Sometimes, you need to make an extra payment to an employee who has died after you submit your FPS. For help with doing this, visit our process extra pay for an employee who has died article.