National insurance category X means an employee is exempt from paying NI. You can use this category for the below situations.

• The employee is under 16
• The employee has deceased

How is category X applied?

The employee is under 16

1. Select Employees from the menu bar.
2. Choose the correct employee.
3. Scroll to the Current Tax Details section.
4. Select the NI Category dropdown and choose X (exempt from National Insurance).
5. Tick, I understand and wish to change the NI Category.
6. Select Save.

The employee has deceased

Change the Ni category in their final pay run only, rather than in the employee record.

1. Process the pay run until the PAY stage.
2. Select the employees name in green text to open the Edit employees details dialog box.
3. Change the NI category to X (exempt from National Insurance).
4. Tick, I understand and wish to change the NI Category.
5. Select Save.

The employee earns below the Secondary Threshold (ST)

You don't need to apply category X yourself. When you set up an employee, specify the normal NI category they are on and enter the correct NI number.

Sage will then check the employee’s earnings in each pay run, and automatically applies NI category X if necessary.

You can find further information on the HMRC website at gov.uk/national-insurance-rates-letters.

Category X in payroll reports

P11 and P60

• The NI values will show as zero on these reports for the periods the employee is on Category X

FPS submissions

• If an employee is on category X, then the submission will show CAT X and the NI values are zero
• If an employee is under 16 or earns below the ST, then no NI category or values show

This is in line with HMRC guidance.