Ni Deferment



I have an employee with a certificate of deferment for the current tax year. This was applied in Month 4 and a repayment of over paid EE NI was repaid to the employee. How do I reflect this in Sage Payroll - HMRC have been chasing for an underpayment despite knowing about the certificate of deferment?

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    Hi Bernie,

    Thank you for using Sage City.

    It sounds like you have created a taxable, non-NIable payment to pay the employee from month 4?

    This payment doesn't deduct Employee NI for payment to HMRC, but it also doesn't deduct Employer NI either, which may be the underpayment HMRC are chasing you for. 

    Please confirm this with HMRC prior to following the solution below.

    If this is the case, you need to correct pay run 4 onwards, using a suitable payment which only deducts Employer NI but is still taxable.

    The only one which does this is  the "Redundancy" payment, but this can be renamed to something more suitable.

    This will not deduct any Employee NI, but will still calculate your Employer NI for HMRC.

    You will need to correct the pay runs from month 4 onwards.

    Delete the incorrect payment and replace it with your new "redundancy" payment.

    Your new Employers NI liability will update in your next payroll and your P32 report, and once you pay HMRC the updated liability they should be happy.

    I have put links to the relevant help articles below.

    Create your "Redundancy" payment.

    Make corrections.

    When saving your corrections, select the option "do not show the difference in next pay run".

    Get a copy of the detailed reports before making your changes, and a copy afterwards.

    You will see the difference in your Employer NI each period.

    Kind regards,