The main function of the NI adjustment utility is to allow you to retrospectively change the NI code of an employee in order to correct a range of previous tax periods National Insurance employee and National Insurance employer payments for the current tax year. For example, an employee contracted out and should have been paying NI using NI code D instead of A.
To access the NI adjustment option:-
The Payroll Password form is displayed.
Enter your payroll password.
The PAYROLL menu is displayed.
Select the Miscellaneous options option.
The PR MISCELLANEOUS OPTIONS menu is displayed.
Select the Utility options option.
The UTILITIES menu is displayed.
Select the NI adjustment option.
The NI adjustment form is displayed.
The NI adjustment form is displayed when the NI adjustment option is selected from the UTILITIES menu.
What do you want to do or be advised about?
What processes should have been performed prior to using the NI adjustment utility?
The following processes should have been considered and successfully completed before using the NI adjustment option:
Confirmation from the employee and HM Revenue & Customs has been received authorising the use of the NI code.
Check the Director field on the Static 1 and National Insurance TABS of the payroll record to ensure the employee is not a director for NI purposes. The NI adjustment utility may not be used to retrospectively adjust the NI code for a director for NI purposes. If the employee is a director for NI purposes please contact the accounts software support department for further advice.
Check the latest NI code on the Static 1 TAB of the payroll record and update it if necessary.
Enter all of the current period payroll data for the employee and calculate pay. This is especially important if the NI adjustment required involves taking an additional NI payment off the employee since additional NI payments for employees are capped at the normal period NI amount for the employee.
Ensure you have selected a correct printer for payroll purposes in condensed mode since the NI adjustment option will print an audit report.
Now proceed to complete the NI adjustment form.
Use of the NI adjustment form
Complete each of the fields and click OK.
Employee number: The up to six digit employee number. The utility may not be used if the employee is a director for NI purposes, if you select a director for NI you will be advised Director status found, need to correct manually.
Tip: Click the Ellipsis button
to select an employee from the payroll records database.
First tax period: The first tax period of the current tax year requiring correction. The first period entered must be earlier than the current tax period.
Last tax period: The last tax period of the current tax year requiring correction. The last tax period must not be before the first tax period.
Correct N.I. code: The NI code that should have been used for the range of tax periods entered.
Tip: Click the Ellipsis button
PUSH BUTTONS:
OK: Proceeds to perform the NI adjustment and prints an audit report to the current selected printer. Any NI underpayment recovery restriction will be advised on screen and on the audit report. Now proceed to complete the Post NI adjustment processes.
Exit: Returns you to the UTILITIES MENU with no NI adjustment being performed.
Help: Displays help on the current application in your default company browser.
The NI adjustment process and report
The P11 history file will be adjusted firstly for all periods concerned followed by the payroll record. Net pay though is not changed since Net pay is revised once the NI adjustment is processed by the Calculate pay option in the current payroll period. The NI adjustment figures are seen on the Static 1 TAB of the payroll record.
Once the employee has been re-calculated as forced by the system a revised payslip can be issued showing the NI adjustment. Confirming the payroll will generate nominal ledger postings for the NI adjustment using the normal NI employer and NI Control accounts.
An audit report is produced detailing the old and new values for each tax period in turn. In the middle of the audit report in particular it will show the actual NI employee adjustment followed by the Uncapped NI employee adjustment. If the amount of NI that can be recovered is capped it will be directly followed with an * symbol and an advisory note will be shown at the bottom of the audit report that further adjustment is needed. This is because the NI payment recovery is restricted to the period NI employee amount hence the importance in entering the current period payroll data and calculating the payroll before using the NI adjustment utility. If the underpayment cannot be claimed from the employee during the course of the current tax year the liability will fall on the employer.
The far right of the audit report shows which sections on the payroll record have been used. NI - shows where the NI data has been adjusted from and NI + where the new NI data has been inserted. Source 0 means the current NI information as seen on the Totals TAB, sources 1 and 2 mean the NI history slots 1 and 2 on the National Insurance TAB.
The report also shows a summary of the latest changes and changes to date during the current payroll period.
What processes should be performed after using the NI adjustment utility?
The following processes should be performed after using the NI adjustment utility:
Review the NI adjustment audit report. The audit report will advise in particular if any additional NI employee payment has not been taken due to the capping restrictions.
Review the top right section of the Static 1 TAB of the payroll record to confirm the adjustment values seen on the audit report are in place.
Calculate the pay for the employee.
Preview the payslip on the screen and confirm the NI adjustment values as seen on the audit report are shown.
