Tax and NICs

THIS IS ONE OF THE MOST IMPORTANT SECTIONS ON THE PAYROLL SOFTWARE. THE INFORMATION YOU ENTER FOR EACH EMPLOYEE WILL DETERMINE THE TAX & NIC THEY WILL PAY DURING THE TAX YEAR.

To access this utility go to Employees > New Employee > Tax/ NIC

Complete the Tax & NIC details for the employee

Tax, NIC & Student Loan

Student P38(S)

If you have a student who is on a course in the UK and they work solely in the holiday periods (summer, Christmas, Easter) they may be able to receive your wages without tax being deducted. They will need to complete a student exemption P38 S form. If they are successful and are exempt from Tax tick the box provided. The System will not give the employee a Tax code and you will not be able to submit a P45/ P46 to HMRC for this employee.

Tax Code

The payroll software will default to the tax code 747L. Simply amend this code if necessary.
To amend the tax code, click in to the box and type in the desired tax code. See help file Tax codes –the basics for more information on tax codes.

Week 1/ Month 1 Basis

Tick if HMRC Specify Employee to be on a week/ month 1 basis. The week 1/ month 1 means employees tax will be calculated on the earnings for that week/ month alone. No other earnings for the year will be taken in to account when calculating the Tax for that week/ month.

National Insurance Table

The system will default the employees national insurance class to A. If you require help selecting the NI class - Click “Choose” beside NI Table. Tick any statement that is applicable to the new employee. The payroll software will recommend the appropriate NI class.

Student loan

If you receive a Notice to Start Student Loan Deductions form SL1, tick the box provided. Bright Pay will automatically deduct the amount according to the Student Loan Deduction Tables. (students attending University can opt to pay back loans, taken to cover University fees and the like, when they commence employment)

National Insurance Number

Type in the employees national insurance number. The NI number would be in the    format of two letters, six numbers and one letter. Eg. AB123456C. The system cannot add in a new employee with either a National insurance number or a Date of Birth.

No employer NIC Liability

If employer is not liable to pay NIC to HMRC, tick this box. HMRC will make the employer aware if they do not have to pay employers NIC,

Director

Tick box if employee was/ is a director with the company. You can then enter the dates the director started/ ended their directorship. If the director was a director from the start of the tax year there is no need to enter a start date. Similarly if the director will be a director until the end of the tax year there is no need to enter an end date.

• "Directors Alternate basis"
  if employee is a Director, opting to pay NIC on a pro-rata annual basis. This means the director will start to pay NIC straight away. HMRC recommends using the normal calculation of NICs for directors unless they are made director mid year and have already reached the threshold for NIC

Click Save to save the employee on the payroll software.