Changing NI Category

When a new joiner is added the NI category is automatically assigned. This will be one of:

• A: Standard NI category

• C: Employee over stage pension age

• H: Apprentice under 25

• M: Employee under 21

The effective date of the NI category will be populated with the same date as the employee start date.

In the period the employee joins, the NI category can be changed without any impact i.e. by reprocessing the employee NI and the associated thresholds will be recalculated based on the amended NI category.

If the effective date of the NI change is not populated on the 'Edit personal' screen then on click Save the following message is shown:

The User is being asked to confirm whether the change in NI category is to correct an error e.g. the wrong NI category was entered from the outset in which case no change of effective date is required, or whether there has been an actual change in NI category in which case the effective date of the new NI category must be entered.

Click the Cancel button to go back and change the effective date, or the OK button to accept the existing effective date.

Click the Save button.

The original NI category will get automatically written to the 'Previous NI category' field and the original effective date is written to 'NI category previous effective from'. This can be viewed in the 'Payroll administration' section at the bottom of the Edit screen

If the effective date entered is before the start of the current period the Retro pending count on the Pay Run will be incremented accordingly. When the Pay Run is processed National Insurance will be calculated retrospectively with the thresholds being automatically adjusted and correct values submitted to HMRC on the FPS.

Please note:

• The effective date entered should NOT be before 6th April of the current tax year as NI calculated and reported to HMRC should relate to the current tax year only. The Previous Year FPS process should be followed for NI that is to be corrected for previous years. If an effective date for a previous tax year was entered this would result in a retrospective NI calculation spanning 2 tax years being performed.

• An NI category change entered with an effective date that relates to a future pay period will immediately take effect in the next available pay run i.e. it will treat future effective dates as if the date fell within the current pay period

• Up to 3 changes in NI category are supported for a particular tax year

Example

The current period is February 2021. James Brown is on NI category A but should have been on NI category C effective 1/1/2021. The NI category is changed to C on the employee record and the effective date changed to 1/1/2021. The 'Retro pending' count has automatically increased by 1 for the February Pay Run to reflect this change which will result in a retrospective calculation taking place.

The NI originally calculated in January 2021 is as follows:

(the Pay Summary is accessed by clicking on Pay Run > 'Pay' link above Payroll path > 'Pay record' link for appropriate employee > HMRC tab).

After the Retro run for February is processed:

Everything under 'NI - first category' i.e. category A in this example has been reversed. This will also reduce the NI YTDs for NI category A by the same amounts. The amounts reversed have been added into the 'NI - second category' section i.e. category C in this example. The only change to value is Employee's NI i.e. full value is reduced against A and replaced with 0.00 against C (as there is no Employee's NI for category C).