Details on the NHS pension band changes approved on 31 May 2023 in Sage 50 Payroll.
Description
On 31 May 2023, the Government approved changes to NHS Pension bands. These changes apply retrospectively from 1 April 2023.
Resolution
The contribution rates remain the same for each tier, however the bands on each tier have increased. If you'd like to view the bands, use the options below.
- Old bands effective before the 31 May 2023 changes >
Tier | Applicable from | Applicable to | Employee contribution rate |
1 | £0.01 | £13,246.99 | 5.1% |
2 | £13,247.00 | £16,831.99 | 5.7% |
3 | £16,832.00 | £22,878.99 | 6.1% |
4 | £22,879.00 | £23,948.99 | 6.8% |
5 | £23,949.00 | £28,223.99 | 7.7% |
6 | £28,224.00 | £29,179.99 | 8.8% |
7 | £29,180.00 | £43,805.99 | 9.8% |
8 | £43,806.00 | £49,245.99 | 10% |
9 | £49,246.00 | £56,163.99 | 11.6% |
10 | £56,164.00 | £72,030.99 | 12.5% |
11 | £72,031.00 | and over | 13.5% |
- New bands applied by 31 May 2023 changes >
Tier | Applicable from | Applicable to | Employee contribution rate |
1 | £0.01 | £13,246.99 | 5.1% |
2 | £13,247.00 | £17,673.99 | 5.7% |
3 | £17,674.00 | £24,022.99 | 6.1% |
4 | £24,023.00 | £25,146.99 | 6.8% |
5 | £25,147.00 | £29,634.99 | 7.7% |
6 | £29,635.00 | £30,638.99 | 8.8% |
7 | £30,639.00 | £45,995.99 | 9.8% |
8 | £45,996.00 | £51,707.99 | 10% |
9 | £51,708.00 | £58,971.99 | 11.6% |
10 | £58,972.00 | £75,632.99 | 12.5% |
11 | £75,633.00 | and over | 13.5% |
Software update
Sage 50 Payroll v29.01 is now available, and it includes the updated NHS pension salary bands. If you haven't installed this update yet, visit our guide to download and install Sage 50 Payroll v29.01.
After you install the update, you can use NHS Pension Tiers in each period you process to easily assess the recommended NHS pension tier for your employees. How do I process using the NHS Pensions Module? >
The software update can't correct prior periods if you processed employee's on what's now an incorrect tier. To find out more, including how to check your employees, continue to follow this guide.
How do the changes affect employees?
Because the bands have increased retrospectively, your employees may have overpaid contributions. View an example >
If an employee's annualised pay was £17,000 in April 2023 their salary fell in band three, which was £16,823.00 to £22,878.99. Their contributions were 6.1% in this band.
On the new bands, this salary falls into band two, which ranges from £13,247.00 to £17,673.99. The contributions for this band are 5.7%, meaning the employee overpaid by 0.4%
What do I need to do?
Check your employees' contributions for pay runs from 1 April to date. If you find any employees you processed on a band that's no longer correct, you must correct this.
NOTE: If all your employees stay on the same tier in each pay period despite the band changes, you don't need to complete any corrections.
We've built a report that you can now download and run to check whether employees have new recommended tiers. Continue to the check previous contributions section to find out more and download the report.
Check previous contributions
Your software doesn't log which tier you processed employees on in prior periods. We've created a report that annualises your employees' pensionable pay in each pay period, and compares this to the salary bands on each tier.
The report confirms the recommended tier based on the original bands and the updated bands, and whether these match.
CAUTION: If you didn't originally process an employee on the recommended tier, the report doesn't highlight this. Find out more >
If you printed the report within NHS Pension Tiers when you processed each period this confirms the tier applied to each employee. If you don't have any reports confirming the tier applied, you need to check the tiers manually:
- Back up your data >
- Click File then Recover, and use this to go back to the first period you need to check. The Recover option - restoring an automatic backup >
TIP: Recover takes your data back to the moment before you updated records. The tiers applied at this point were what you processed your employees on. - Click Payroll, then NHS Pension Tiers.
- Click the print icon in the bottom right to print the NHS Pension Tiers report. This printout confirms the tier for each employee.
- Use Recover again to move to the next period and print the NHS Pension Tiers report.
- Repeat this for each pay period you need to check the NHS Pension Tiers.
- Once you've printed the report for each period, restore the backup you took in Step 1 to bring your data up to date.
Add the report to your software
- Click the link below to download the updated report.
- Download the report >
NOTE: If you're prompted to select where to save your download, select a location you can easily find, for example, the Window Desktop.
- In Sage 50 Payroll, click Help then About.
- Click the link beside Reports directory.
- Double click the Userdef folder.
- Browse to your Downloads folder or the folder you selected to save the download, right-click NHS_Tiers_May_2023.report and click Copy.
- Right-click within your Userdef folder and click Paste.
The report is now ready to run in your software.
Run the report
When you check employee tiers, you must also check for any overpayments made by employees who've now left their employment. If any leavers have overpaid, you must still correct their contributions and pay any extra amount owed to them.
- On your employee list, highlight the employees who have contributed to your NHS pension scheme since 1 April 2023.
NOTE: If leavers are hidden from your employee list click Criteria then untick Leavers, and if required Historical Leavers, then click OK. - Click Reports, then click the User Defined (Local) folder on the left.
- Locate and run the NHS Tiers pre and post May 2023 report.
- In the Criteria Values window, set the date range as from 01/04/2023 to the most recent period you processed using the old bands.
- Click OK.
Correct previous contributions
If you find any employees overpaid in any prior periods, you must correct these.
Sage 50 Payroll can't automatically change pension contribution values for a prior period, or calculate these backdated amounts in a subsequent pay run.
If any employees have overpaid pension contributions, you must either:
- Reprocess the relevant pay periods for any affected employees using the correct tier based on the new bands
- Manually calculate the overpayment and apply this as an adjustment in the next period
Click the options below for the steps to compete each process.
- Reprocess >
If you'd prefer to reprocess, you must:
- Rollback the affected employees for any pay periods that include an overpayment.
- Manually assess them against the new bands.
- Assign their correct new tier in NHS Pension Tiers and your software calculates the correct contributions.
- Update records to complete the period, then repeat the process if you're correcting more than one period.
For help to rollback and make a correction, visit our guide on how to correct a previous payroll run >
When you reprocess the employee on their correct new tier, their pension contribution decreases and net pay increases. After reprocessing, issue new payslips for the periods you've amended to the relevant employees and pay the extra amount owed.
If you'd prefer to pay the extra amount owed on your employees' next pay run, you can add this amount using a post tax, post NI payment. Set up pre and post tax and NI pay elements >
- Manual adjustment >
If you choose to make a manual adjustment, you don't need to do any reprocessing. Instead, you must:
- Manually assess the correct tier for the employee for any periods processed on an incorrect tier.
- Calculate the affected employees' contribution based on their new correct tier.
- Compare this to the contributions they've already paid to establish how much they overpaid.
Once you've calculated the amount overpaid, you can reduce their next contribution by this amount using the NHS Pensions module.
To process the adjustment during their next pay run:
- Enter payments for the employee as normal.
- Click NHS Pension Tiers, manually check the employee's pay against the new bands.
- Click the dropdown menu beside Tier to apply and assign the correct tier based on the new bands.
- Click Save, then click NHS Pension Contributions.
- Under the Adjust this period column, enter the amount of the correction for any affected employees.
NOTE: You can enter a negative amount to this field to reduce the contribution this period. - Click Save.
You can now complete the pay run as normal.
When you process the following pay period, you must assign the correct tier based on the new bands. You don't need to add another adjustment.