To create or edit an employee record

To help you manage your employees, you can create and maintain records for them. You can enter their personal details, tax code, NI category, as well as any P45 or P46 information.

A new employee should always be created prior running their first pay run. If you’ve already completed a pay run that an employee should have been included in, and the employee has not been created, you will be unable to process them in that pay run. You must wait until you’ve set the next pay run to create the employee.

To create a new employee

Watch how

  • 1. Go to Employees, then click Create Employee.

Any options marked with an asterisk * are mandatory. You must fill them in.

  • 2. Under Personal Details, enter the employee’s name, date of birth, gender and national insurance (NI) number.

If you can’t find the employee’s NI number or the employee is under 16, leave the NI number box blank and start the employee on a P46 basis. HMRC automatically trace the employee’s NI number and send you a CA6856 form to confirm the number.

  • 3. Under Contact Details, enter the employee’s postal address (including Street 2) and telephone number.

If you want to email payslips to this employee, enter their email address and set a password. The employee requires this password to view any payslips you send them by email.

  • 4. Under Employment Details, complete the following information if relevant:
Pay Cycle Select how often you’re going to pay this employee. This can be weekly, two weekly, four weekly or monthly.
Contracted Weekly Hours The number of hours the employee is contracted to work per week for you. This option only appears if you’re operating RTI.
RTI Pay ID This is used to capture a unique employee reference for your company which is included in your submissions to HMRC:

  • If you’re transferring from another payroll system part way through a tax year that uses the RTI Pay ID, you must enter this on each employee.
  • If your previous payroll system was HMRC Basic Tools, you can find the RTI Pay ID under Employee Details > Employment Details > Payroll ID.
  • If your employee is a new starter who has moved from another business, or you haven’t previously used a payroll system to submit your employees under RTI, Payroll will automatically assign them an RTI Pay ID.
Works Number The unique code that identifies the employee in the company.
Start Date The date the employee started working for you.
Payment Method The method you pay your employee. If you select Bank Transfer, enter the account details.
Exclude from Auto Enrolment If you don’t need to assess this worker under automatic enrolment conditions, select this check box.

If you are uncertain whether an employee should be excluded or not from automatic enrolment, you should confirm this with the Pensions Regulator.
  • 5. If the employee is a director of the company, select the Is a Director check box.

If this employee is not a director, skip to step 7.

  • 6. Enter the following Directorship details:
Directorship Started Use the drop-down list to specify whether the employee became a director in a previous tax year, or during the current tax year. If the directorship started in the current tax year, you must also specify the start date.
Preferred Calc Method You can calculate Directors’ NI in two different ways.

Each method gives the same NI liability amount by the end of the tax year, although NI payments during the year can be quite different under the two methods:

  • Calculate NI Cumulatively

    This is the default calculation method. It is most common for directors who are paid irregularly by the company, and uses annual earnings thresholds to determine the director’s NI liability in a particular pay run. The director is not liable for NI until their total earnings during the tax year exceed the Annual Primary Threshold.
  • Calculate NI Per Pay Run

    This calculation method, sometimes called the alternative method, determines the director’s NI liability on a weekly/monthly basis in each pay run using weekly or monthly earnings thresholds.

    It is most common for directors who are paid regularly by the company. As this method produces an average NI liability in each pay run without reference to other pay runs. A balancing calculation is carried out at an appropriate time using year to date earnings thresholds. This makes any necessary correction to the director’s NI liability.
  • 7. Under Previous Tax Details, in the Starting Basis list, click one of the following:
This is an existing employee Select this option if you are setting up an employee who already works for you and is paid in the normal way. For example, if you’re setting up for the first time, you need to set up your existing employees.
Employee Declaration: P45 Select this option if the new employee has presented a P45 Part 3 issued by their previous employer. Then choose one of the following circumstance options:

* Circumstance A

Select this declaration if this is the employee’s first job since the last 6 April, and they have not been receiving taxable Jobseeker’s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, or a state or occupational pension.

* Circumstance B

Select this declaration if this is the new employee’s only job, but since last 6 April they have had another job, or has received taxable Jobseeker’s Allowance, Employment and Support Allowance, or taxable Incapacity Benefit. This option also declares that the employee does not receive a state or occupational pension.

* Circumstance C

Select this declaration if the new employee also currently has another job, or receives a state or occupational pension.


Note: If you’re unsure which circumstance to use, you can use the HMRC online tool for guidance.
Employee Declaration: P46 Select this option if the new employee doesn’t have a P45 from their previous employer. Then choose one of the following circumstance options:

* Circumstance A

Select this declaration if this is the employee’s first job since the last 6 April, and they have not been receiving taxable Jobseeker’s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, or a state or occupational pension.

* Circumstance B

Select this declaration if this is the new employee’s only job, but since last 6 April they have had another job, or has received taxable Jobseeker’s Allowance, Employment and Support Allowance, or taxable Incapacity Benefit. This option also declares that the employee does not receive a state or occupational pension.

* Circumstance C

Select this declaration if the new employee also currently has another job, or receives a state or occupational pension. This automatically applies tax code BR. This means there is no free pay allowance and gross pay is taxed at 20%.

* Unknown

Choose this circumstance option when you don’t have enough information on the starter to complete a P46.

This automatically applies tax code 0T on a Week 1/Month 1 basis with no free pay allowance. Tax is calculated as normal, at 20%, 40% or 45% depending on the employee’s earnings. This is intended to encourage them to contact HMRC on the Income Tax helpline – 0300 200 3300, so the correct tax code can be issued.


Note: If you’re unsure which circumstance to use, you can use the HMRC online tool for guidance.
  • 8. Depending on the Start Basis you chose, enter the following details:
NI Category The employee’s National Insurance category. You must specify this for any new employees. The letters are A, B, C, J, H, M and Z.

Tip: For employees under 16, you would normally assign letter A. Your Sage software recognises that the employee is not yet due to pay NI, so doesn’t deduct this from their pay until they turn 16.
Tax Code The tax code determines the tax allowances the employee receives. You must specify this if the employee already works for you or has presented a P45 Part 3.

The tax code should be specified on the P45 Part 3.If the new employee does not present a P45, they must complete a P46, which will indicate which tax code they should be on.

If the employee’s tax code subsequently needs to be changed to take into account the employee’s correct total pay to date and total tax to date values for the tax year, HMRC will inform you.
Leaving Date The date on which the employee finished their previous employment.
Week 1/Month 1 If the employee’s tax is calculated on a week 1 / month 1, or non-cumulative basis, select this check box. When you do this, the tax is based on the employee’s pay in the current period, instead of cumulative for the full year.
Final Pay Period The week or month of the employee’s final pay run in their previous employment.
Total Pay to date The total amount of pay the employee has received in the tax year to date, if any. You can get this from the employee’s P45 Part 3.

If the employee is set to Week 1/Month 1 set this value to zero.
Total Tax to date The total amount of tax paid by the employee in the tax year to date, as specified on their P45.

If the employee is set to Week 1/Month 1 set this value to zero.

If the employee is not set to Week 1/Month 1, Payroll automatically calculates the employee’s total tax liability for the tax year to date based on:

  • The employee’s tax code.
  • The final pay period.
  • Total pay to date.

    The value it calculates normally should agree with the P45 Part 3. If the values don’t agree, the Calculated P11 Tax appears. This specifies the automatically calculated value.

    The calculated value is added to the P11 and is used for subsequent tax calculations, rather than the value on the P45.
Student loan If student loan repayments were taken by their previous employer, select this check box.
Employer’s PAYE Ref This reference number identifies the employee’s previous employer if any. It appears on their P45.
  • 9. Click Save.

The new employee now appears in your list of employees.

  • 10. Check the Status column.

If any further action is needed to make the employee active, this shows here. If an NVR response message appears, this may be due to an issue with the employee’s NI number.

  • 11. To specify the days this employee works on, click the relevant employee to open their record.
  • 12. Click the Working Pattern tab, then click Edit.
  • 13. Choose Monday – Friday or one of the custom working patterns, then click Save.

The employee is now active in the payroll. When you process their first pay, their details are submitted automatically to HMRC on the full payment submission (FPS).

To edit an employee’s details

Watch how

  • 1. Go to Employees, then click the relevant employee to open their record.
  • 2. Click Edit.
  • 3. Change the information in the Employee Details tab as required.

You can also change the working pattern type on the Working Pattern tab. By default, this is set to Monday – Friday. You can’t amend the information shown on the Workplace Pensions tab. This automatically updates once you complete each step for automatic enrolment.

  • 4. Click Save.