This article covers:

• When to use National Insurance (NI) category M in Sage Payroll
• How to resolve the error: ‘NI Category ’M’ is not valid for employees over 21. You must correct this before you can proceed.’

• For an employee aged between 16 and 20 years old, you need to assign NI category M
• Apprentices are treated differently. Read our article Paying apprentices the correct national minimum wage

• For other exceptions and further information, please read National Insurance rates and categories (opens in a new tab)

Under 16's

Under 16's don't pay NI unless they earn over their personal allowance. If paid under the personal allowance you don't need to add them to payroll. Please read the article Income Tax Rates and Personal Allowances (opens in new tab). If you want to add them to payroll, use category M. For more information, read the GOV.UK article Child employment (opens in new tab).

How it works

With NI category M, employee NI is due, but employer NI is not. When an employee moves from category M to category A at 21 years old, employer NI is then also due.

When to update the category

Your employee's age on the date you pay them determines their NI category. If the employee turns 21 before the process date, you must change the category before processing the payroll.

If your employee turns 21 after your process date, you must change their category. Complete this before you process their next pay period. But don’t worry, if you forget to do this, Sage Payroll prompts you to do so.

Resolve errors

When you process your pay, you will receive an error message: ‘Error: NI Category 'M' is not valid for employees over 21'. You must correct this before you can proceed.’

To resolve the error message, complete the following steps:

1. Select the Employees tab, then the relevant employee.
2. Under Personal Details, check the employee’s date of birth is correct. If it’s not, edit as required.
3. Under Current Tax Details, from the NI Category drop-down, select the correct category. If you need help with NI categories, read our National Insurance article.
4. Select Save.

You can now process the employee’s pay details as normal.

• Paying apprentices the correct national minimum wage