| | Employee records - a detailed breakdown |
| Description | This article will explain each of the options in an employee record. Before you process a pay run, you need to make sure: - You have created a record for each of your employees
- The information on each employee record is accurate and up to date
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| Resolution | Access the employee details - Within Sage payroll, select the Employees tab.
- Make sure the Employee Details tab is selected.
- If you make changes to any of the details in the record, select Save.
Personal Details > This section contains the: - Employee name
- National Insurance number
- Date of birth
- Gender
No NI number? If the employee hasn't supplied an NI number - Leave the NI number box blank
- Start the employee on a P46 basis
HMRC will trace the employee’s NI number and send you a CA6856 form to confirm the number. After you complete all relevant fields, select Save. The new employee now appears in your list of employees. If you need to take further action to make the employee active, it will show in the status column. If an NVR response message appears, this may be due to an issue with the employee’s NI number.
This section contains the: - Full postal address
- Telephone number
- Email address
 NOTE: An email address is required if you want to use Sage HR Essentials or email payslips.
If you want to email payslips: - Include their email address and set a password.
- Send the password to the employee. They will need it to view any payslips you send them by email
After you complete all relevant fields, select Save. The new employee now appears in your list of employees. If you need to take further action to make the employee active, it will show in the status column. If an NVR response message appears, this may be due to an issue with the employee’s NI number.
This section contains: | Pay Cycle | Select how often you’re going to pay this employee. This can be weekly, two weekly, four weekly or monthly. | | Contracted Weekly Hours | The set number of hours the employee works for you, per week. | | Works Number | The unique code that identifies the employee in the company. | | Start Date | The date the employee started working for you. | | Payment Method | The method you pay your employee. If you select Bank Transfer, enter the account details. | | Deemed Employee | If off-payroll working rules apply to a worker, select this check box. If you are unsure, read our article Off-payroll working rules apply - IR35 |
This section contains: | Tax code | In the 2024/2025 tax year the basic tax code is 1257L | | Week1/Month1 | Tax codes with a W1 or M1 suffix ignore accumulative values. The tax calculates using the gross pay for the current period only. The tax allowance is for the first week or month of the tax year, regardless of the actual tax period. | | Ni category | An employee pays national insurance (NI) contributions to qualify for certain State benefits. Read our article National Insurance (NI). | | On Trade Dispute | Select this if there is a dispute with the employee. This doesn't prevent the employee being paid. It will flag up as a reminder during the pay run, at the Edit Pay stage. | | RTI Pay ID | Every employee has a unique employee reference for your company. It's included in submissions to HMRC. The payroll assigns unique reference numbers to all new employees. What if I'm transferring from another payroll system?
If you are adding a new employee who has had no previous processing: Leave the RTI Pay ID blank
If you're adding an employee who is already processed your previous payroll system: Enter the RTI Pay ID from your old system
If your previous payroll system was HMRC Basic Tools, or you don't have access to the RTI Pay ID: Contact the HMRC Employer Helpline (opens in new tab) and ask for the employees RTI Pay ID. | | Directorship Details | If the employee is a director of the company, select the Is a Director check box. | | Directorship Started | Specify whether the employee became a director in a previous tax year, or during the current tax year. If the directorship started in the current tax year, you must also specify the start date. | | Preferred Calc Method | You can calculate Directors’ NI in two ways.
Each method gives the same NI liability amount at the end of the tax year. NI payments within the tax year can vary under the two methods:
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Calculate NI Cumulatively
This is the default calculation method. Use if you pay your director in regular intervals. It uses annual earnings thresholds to determine the director's NI liability in a pay run.
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Calculate NI Per Pay Run Sometimes called the alternative method. It uses weekly or monthly earnings thresholds to determine your director's NI liability. It does not reference other pay runs. Use this if you pay your directors in regular periods. It produces an average NI liability in each pay run. A balancing calculation is then happens using year to date earnings thresholds. This makes any necessary correction to the director’s NI liability. Find out more about director's National Insurance. | To change your employee from a director to a standard employee you will need to edit the employee record. Go to the Employees tab and click on the relevant employee record. Under Directorship Details clear the Is a Director checkbox. After you complete all relevant fields, select Save.  TIP: The employee NI will calculate on a cumulative basis until the end of the current tax year. Next tax year, the NI calculation method will revert to Per Pay Run.
This section is used when: - You have a new starter
Read our article Add a new employee - An established employee brings you a P45 from the current tax year
- HMRC informs you of an employee tax code change (P6 or P9)
If your new employee has a P45, you will use the section Employee Declaration: P45 If your employee has no P45 you will use section Employee Declaration: P46 If you're unsure what to use when creating a new employee, you can use the HMRC online tool (opens in a new tab) | This is an existing employee | Select this option if you are setting up an employee who already works for you and you pay them in the normal way. For example, if you’re setting up for the first time, you need to set up your existing employees. | | Employee Declaration: P45 | Select this option if the new employee has presented a P45 Part 3 issued by their previous employer. Then choose one of the following options:
Circumstance A Use this if it's the employee’s first job since 6 April and they have not received any of the following: - Taxable Jobseeker’s Allowance
- Employment and Support Allowance
- Taxable Incapacity Benefit
- State or occupational pension
Circumstance B Use this if it's the new employee’s only job, but since 6 April any of the following apply: - They have had another job
- They have received taxable Jobseeker’s Allowance
- They have received Employment and Support Allowance
- They have received taxable Incapacity Benefit
This also declares that they do not receive a state or occupational pension. Circumstance C Use this if the new employee: - Also currently has another job
- Receives a state or occupational pension
NOTE: If you’re unsure which circumstance to use, you can use the HMRC online tool (opens in a new tab). | | Employee Declaration: P46 | Select this if the new employee doesn’t have a P45 from their previous employer. Then choose one of the following options:
Circumstance A Use this if it's the employee’s first job since 6 April and they have not received any of the following: - Taxable Jobseeker’s Allowance
- Employment and Support Allowance
- Taxable Incapacity Benefit
- State or occupational pension
Put the employee on a 1257L tax code. Circumstance B Use this if it's the new employee’s only job, but since 6 April any of the following apply: - They have had another job
- They have received taxable Jobseeker’s Allowance
- They have received Employment and Support Allowance
- They have received taxable Incapacity Benefit
This also declares that they do not receive a state or occupational pension. Use the tax code 1257L on a 'Week 1/Month 1' basis. Circumstance C Use this if the new employee: - Also currently has another job
- Receives a state or occupational pension
This applies tax code BR. This means there is no free pay allowance and gross pay gets taxed at 20%. Use the tax code BR Unknown Use this if you don’t have enough information on the employee to complete a P46. This applies tax code 0T on a Week 1/Month 1 basis with no free pay allowance. Tax calculates as normal, at 20%, 40% or 45% depending on the employee’s earnings. Employees must contact HMRC so the correct tax code can be issued. NOTE: If you’re unsure which circumstance to use, you can use the HMRC online tool (opens in a new tab). |
Depending on the Start Basis you chose, enter the following details:
| NI Category | The employee’s National Insurance category. You must specify this for new employees. The letters are A, B, C, J, H, M and Z.
Employees under 16, normally use letter A. This confirms the employee is not due to pay NI. This is not payable until they turn 16. See the gov.uk site for more information about child employment (opens in a new tab) | | Tax Code | The tax code determines the tax allowances your employee gets. You must enter this if the employee already works for you or has presented a P45 Part 3.
The tax code is on the P45 Part 3. If the new employee does not present a P45, they must complete a P46. This says which tax code they should be on.
HMRC will notify you if the employee's tax code needs updating. | | Leaving Date | The date the employee finished their previous employment. | | Week 1/Month 1 | If your employee’s tax calculates on a week 1 / month 1, or non-cumulative basis, select this check box. This bases the tax on their pay in the current period, instead of cumulative for the full year. | | Final Pay Period | The week or month of your employee’s final pay run in their previous employment. | | Total Pay to date | The total amount of pay your employee has received in the tax year to date, if any. You can get this from their P45 Part 3.
If they are set to Week 1/Month 1, set this value to zero. | | Total Tax to date | The total amount of tax paid by your employee in the tax year to date, as specified on their P45. If they are set to Week 1/Month 1, set this value to zero. If they are not set to Week 1/Month 1, Payroll calculates their total tax liability for the tax year to date based on: - The employee’s tax code
- The final pay period
- Total pay to date
The calculated value should agree with the P45 Part 3. If the values don’t agree, the Calculated P11 Tax appears. This specifies the calculated value. The calculated value adds onto the P11. It's then used for tax calculations, rather than the value on the P45. | Student loan
| Select this if the previous employer deducted student loan repayments. | |
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