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Correct National Insurance contributions in QuickBooks Advanced Payroll

by Intuit•1• Updated 2 weeks ago

If you're using QuickBooks Online Advanced Payroll, it's important to ensure your employees' National Insurance (NI) contributions are calculated correctly.

If an employee has previously been reported to HMRC with an incorrect NI category, you can use the Back Calculate NI option to correct it for the current tax year. This article shows you how.

This article is for customers who use QuickBooks Online Advanced Payroll.

Step 1: Open the pay run

Go to All apps , select Payroll, then select Overview (Take me there).
Select the Pay runs tab.
Open the current pay run.

Step 2: Select the employee

Select the arrow next to the employee's name.
Choose Actions, then Back Calculate NI.

Step 3: Recalculate NI

Select the correct NI category for the employee.
Enter the relevant from and to dates (these must be within the same tax year).
Select Calculate.
A breakdown will show the original NI contributions and the new NI contributions.

Step 4: Apply the changes

Review the figures and, if correct, select Apply.
In the pay run, check the HMRC Adjustments section.
Any overpayment of NI will appear as a negative number.

Step 5: Finalise the pay run

Complete the pay run and submit the FPS to HMRC.
The NI figures for each period affected by the back calculation will now appear correctly.

Important to know

Employers must deduct National Insurance from employees’ wages.
If a back calculation creates an underpayment, government rules limit how much can be recovered per pay run.
Employees will see a note on their payslips until the full amount has been reclaimed.
The Back Calculate NI feature only works for the current tax year.
For adjustments in a previous tax year, process an HMRC adjustment via the pay run.
If the adjustment affects the employer’s contributions, the P32 will show the updated amount to pay (or not pay) to HMRC.

QuickBooks Online Payroll Advanced