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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Employment maintenance: filing online: employers: automatic setting up of records

This subject is presented as follows

Scottish rate of income tax

The Scottish Government is able to set their own rates of income tax from the 6 April 2016. Where the Scottish Rate of Income Tax applies it will include an ‘S’ Prefix to the tax code, for example, S1100L, SBR, S0T.

The ‘S’ prefix does not apply to Code NT cases. Code NT is used for both UK (England, Wales and Northern Ireland) and Scottish individuals.

Further information is given at PAYE100035

Automatic setting up of employment records

Employers within RTI submit starter information as part of their Full Payment Submission (FPS).

A non RTI employer will submit P46 data using Electronic Data Interchange (EDI) or Online Return and Forms - PAYE (ORFP) to provide details regarding the start of a new employment.

After checking the data, the computer process will automatically update the individual’s employment record from the information received.

A new primary employment record will be created when

  • An FPS is sent with a ‘Start Date’ and ‘Starting Declaration’ of statement A or B
  • An FPS is sent without a ‘Start Date’ or ‘Starting Declaration’, which cannot be matched to an existing employment, and the ‘Start Tax Code’ is not BR, D0, D1, 0T or NT
  • A P46 is sent with a ‘Starting Declaration’ of statement A or B

A new secondary employment record will be created when

  • An FPS is sent with a ‘Start Date’ and ‘Starting Declaration’ of statement C
  • An FPS is sent without a ‘Start Date’ or ‘Starting Declaration’, which cannot be matched to an existing employment and the ‘Start Tax Code’ is BR, D0, D1, 0T or NT
  • A P46 is sent with a ‘Starting Declaration’ of statement C
  • A P46 is sent with no ‘Starting Declaration’ statement completed

An employment created from an FPS can be identified by reviewing the ‘Creation Source’ shown on the EMPLOYMENT DETAILS screen, which will show either

  • ‘RTI’ - when the starter information has been provided on the FPS
    Or
  • ‘RTI Service’ - when the starter information has not been provided on the FPS

Automatic ‘Start Date Update‘

Where an RTI employer submits an FPS which includes a ‘Start Date’, NPS will attempt to match the FPS details to an existing live employment record held for the individual in the same tax year as the ‘Start Date’ shown on the FPS.

The ‘Start Date’ shown on the individual’s employment record will be automatically updated to the ‘Start Date’ shown on the FPS, where

  • The ‘NINO’, ‘Employer PAYE Reference’, and ‘Payroll ID’ on the FPS can be matched to an ‘NINO’, ‘Employer PAYE Reference’, and ‘Payroll ID’ or ‘Works No’ held on the individual’s employment record
    And
  • The ‘Start Date’ falls within the ‘pay period’ associated with the ‘Start Date’ held on the individual’s employment record
    Or
  • The ‘Start Date’ held on the individual’s employment record was entered manually

Note: The ‘pay period’ will be determined by the ‘Pay Frequency’ shown on the FPS, for example, a ‘Start Date’ of 20/02/2013 with a ‘Pay Frequency’ of ‘Calendar Monthly’ falls within the ‘pay period’ 06/02/2013 to 05/03/2013.

Where the above conditions are not met, the ‘Start Date’ will not be updated, and a new employment record will be created.

Automatic re-opening of RTI employment records

A ceased employment record held for an individual will be automatically ‘re-opened’ where an RTI employer submits an FPS which

  • Shows a ‘Payment Date’ which is later than the previously held ‘Leaving Date’ but falls within the same tax year
    And
  • The ‘Taxable Pay to Date’ is not equal to the ‘Taxable Pay in Period’

A new employment record will be automatically created where the above conditions are not met.

Automatic tax code calculation - RTI employments

A tax code will be automatically calculated where

  • A new primary employment record is created, where the tax code is not NT
    Or
  • A ceased primary employment record is re-opened
    Or
  • A secondary employment record is promoted to a primary employment, where ‘override code 0T’ (see PAYE11120) has not been set

The ‘Start Tax Code’ shown on the FPS will be compared to the tax code calculated. Where the ‘Start Tax Code’ is

  • The same as the tax code calculated, a tax code will not be issued
  • Different to the tax code calculated, the calculated tax code will be issued

The ‘basis of operation’ will be automatically calculated according to the following rules.

Starting Declaration A

The ‘basis of operation’ will be issued on a week 1 / month 1 basis where

  • The revised tax code calculated is lower than the ‘Start Tax Code’ shown on the FPS
    Or
  • The revised tax code calculated is higher than the ‘Start Tax Code’ shown on the FPS, but a ceased or ‘potentially ceased’ employment record is held within the current tax year

The ‘basis of operation’ will be issued on a cumulative basis where

  • The revised tax code calculated is higher than the ‘Start Tax Code’ shown on the FPS, and a ceased or ‘potentially ceased’ employment record is not held within the current tax year

Starting Declaration B

The ‘basis of operation’ will always be issued on a week 1 / month 1 basis.

Note: Where a ‘Starting Declaration’ of statement C has been completed and a secondary employment is created for either an RTI or non RTI employment, a revised tax code will be automatically calculated, see PAYE11055.

Work items

A work item will be produced where

  • The P46 or FPS starter information cannot be matched to a single record and so a TRN account is created. See guidance regarding work item 49 at PAYE60036
  • The P46 ‘Start Tax Code’ shown on the submission received from a non RTI employer is not as expected for the ‘Starting Declaration’ shown. See action guide tax40271 WI242