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Administrator Guide
Last Updated: 2023-06-23
Concept: NI Adjustments (UK)

Concept: NI Adjustments (UK)

When you retrospectively change a worker's National Insurance (NI) category, you must adjust previously calculated NI deductions and associated balances. The best practice is to use regular on-cycle payroll input to make the adjustment.
You can also consider:
  • Entering NI for additional payments after an NI adjustment.
  • Entering an NI adjustment that results in a negative value.
  • Entering an NI adjustment after the end of the tax year.
Entering NI for Additional Payments After an NI Adjustment
Workday can't correctly calculate NI for an on-demand additional payment following an NI adjustment in the regular on-cycle period. This restriction is because the pay components all contain values greater than the period threshold.
To make an additional payment following an NI adjustment in the regular on-cycle period, you can select either to:
  • Calculate and enter regular payroll input for NI.
  • Wait, and process either regular payroll input or an on-demand additional payment in the next pay period.
Adjustments That Result in a Negative Value
Workday recommends that you avoid on-demand additional or manual payments when the net result of NI adjustment for an employee would be a negative value. However, if you do make an on-demand additional payment:
  • When the net result of NI adjustment for Employer's NI is either negative or zero, consider:
    • Adjustments to the period's costing.
    • Waiting and adjusting in the next on-cycle payroll calculation.
  • When the net result of NI adjustment for the worker's net pay is zero:
    • What's the benefit to you in using an on-demand additional payment?
    • Don't submit FPS for a zero payment.
Adjustments After the End of the Tax Year (2018-2019 or 2019-2020 Tax Years Only)
When identified before April 19, does the adjustment result in negative pay?
  • No
    : Use an on-demand payment and submit to HMRC by FPS.
  • Yes
    : Consider a reversal and an on-demand additional payment. Submit the result to HMRC by FPS.
When identified after April 19, use an on-demand payment and send an Earlier Year Update (EYU) to HMRC.
When the adjustment has no net effect on the employee, use an on-demand payment. If you don't use an on-demand payment, the FPS and EPS won't reconcile. Contact HMRC to notify them of the adjustment to Employer's NI.
Adjustments After the End of the Tax Year (2020-2021 Tax Years Onwards)
When identified after submitting the final FPS, but before submitting the final EPS, does the adjustment result in negative pay?
  • No
    : Use an on-demand payment and submit a corrected FPS to HMRC. Workday includes the correction in the final EPS.
  • Yes
    : Consider a reversal and an on-demand additional payment. Submit the result to HMRC by FPS. Workday includes the correction in the final EPS.
When identified after April 19, as a prior year correction, does the adjustment result in negative pay?
  • No
    :
    • Use an on-demand
      Prior Period
       payment to correct the NI categories and their associated values.
    • Use the worker's last submitted pay period for the last tax year as the
      Payment Date
      .
    • In the
      Add Worker UK RTI Details
       task, select the
      Late PAYE Reporting Reason
      :
      H. Correction to earlier submission
      .
    • Submit the corrected results to HMRC by FPS and EPS.
  • Yes
    :
    • Use an on-demand
      Prior Period
       payment to correct the NI categories and their associated values. Include a pay component to correct the negative net pay.
    • Use the worker's last submitted pay period for the last tax year as the
      Payment Date
      .
    • In the
      Add Worker UK RTI Details
       task, select the
      Late PAYE Reporting Reason
      :
      H. Correction to earlier submission
      .
    • Submit the corrected results to HMRC by FPS and EPS.