Solution Properties
Solution ID:
230117154237193
Last Modified Date:
Wed Mar 20 15:59:44 UTC 2024
Taxonomy Path:
Case category//How do I...//corrections/adjustments
Author:
[email protected]
How do I correct an employee processed on the wrong NI category?
Description

There are several NI categories available to use when you process your employees pay. Most of these charge NI at different rates for either employee, employer or both.

 TIP: For more information on NI categories, visit gov.uk. 

If you process an employee on an incorrect NI category, their NI may be incorrect. To resolve this, you must reprocess their pay using the correct NI category. 

Cause
Resolution
If you'd like to check the employee and employer NI contribution rates on an existing or new NI category, you can check this in your software.
  1. Click Company, then Legislation.
  2. Click the NI tab.
  3. Under the Rates section, click the dropdown menu beside National Insurance Category and select the category you'd like to check. 
  4. When you're finished, click OK.

Print reports

To keep a record of the contributions that have already been made, print the P11 Deduction Card (NIC Details) report for the relevant employee.

  1. On the Employee List, click the required employee.
  2. Click Reports then click Employee then click P11 Deduction Card (NIC Details).
  3. Click Print then check your printer details are correct then click OK.
  4. Click Close.

You can check the category applied to your employee in each period using theNI Category History Report. Click the Reports button then the Employee category to find this report.

If you don't already have the employee's payslips to hand for the periods affected, print these before you continue. Print and reprint payslips >

Roll back the employee

Before you roll back your employees, we strongly recommend that you back up your data >

  1. On the Employee List, click the required employee.
  2. Click Tasks then click Rollback then click Next.
  3. Check the correct employee is selected then click Next.
  4. Select the earliest pay period that you want to remove then click Next.
     TIP: This is the first period with the incorrect NI category. 
  5. Click Finish then click OK.
    If you've selected the earliest period in the tax year, a message appears informing you that you've selected the oldest update, and prompts you to clear Attachment YTD figures, Statutory Payments details and YTD figures, manually entered YTD figures, P45 figures, student loan from and to dates, and holiday fund year to dates. To clear this information click Yes, to retain these values click No, or to return to the Roll Back wizard click Cancel

Once you've completed the rollback, continue the steps below.

Update the employee's NI category

  1. Double-click the relevant employee then click the Employment tab.
  2. In the NI Category drop-down menu, select the correct NI category then click OK.
     NOTE: If you're not certain which NI category you should use, contact HMRC for advice. 
  3. Click Save, then Close.

Reprocess the employee's pay

You must now set the process date to the earliest period you rolled back, then reprocess the payments. Your software now calculates the NI using the updated NI category.

 NOTE: Depending on the old and new categories, NI liability may change on either employee or employer contributions only, or in some cases on both.

After you've entered the payments, print any pre update reports you require, including payslips. If you upload payslips to the online portal, you can now upload the payslip. Before you move onto the next period, ensure you Update Records.

Repeat this for each period you rolled back until the employee's payroll is up to date.

Next steps

Submit changes to HMRC

When you've processed and updated all periods, you need to submit a FPS adjustment to update the values HMRC hold. If you reprocessed any periods in the prior tax year as part of this process, you also need to submit an adjustment to HMRC for a previous tax year.

TIP: For help with reconciling the liability adjustment, please refer to this guide. 

The employee's pay

Compare the net pay in the employee's old and new payslips to find out if they were overpaid or underpaid.

If the employee has been overpaid, discuss this with the employee and agree how the difference will be recovered, issue their new payslips with the new amounts.

If the employee was underpaid, issue their new payslips and pay the additional net amount they're due. Any refund of an underpayment is already recorded in your software as the NI due decreased and net pay increased when you reprocessed.

If you'd prefer to show the payment of the NI refund on the employee's next payslip, you can use a post tax, post NI payment. Set up pre and post tax and NI pay elements >

HMRC payments

Reprint the P32 for any tax month that you've reprocessed, and compare this to the amount you originally paid to HMRC. The difference is the balance of Employers NI that you need to pay to HMRC.

Nominal link

If you use the nominal link to post your salary journals to Sage 50 Accounts, you must repost the reprocessed periods or manually adjust the values in your accounts.

If you repost the reprocessed periods, this doesn't remove the values in your Accounts software for this employee that you originally posted when you first processed their payroll. To ensure your accounts data is correct after you repost, you must post manual journals to remove this employee's original figures.

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