Employees starting and leaving

Produced by Tolley in association with Vince Ashall

The following Employment Tax guidance note Produced by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Employees starting and leaving
  • National insurance number (NINO)
  • Tax code
  • National insurance letter (category)
  • Student and postgraduate loan deductions
  • Employees leaving
  • Tax on termination
  • NIC on termination
  • Student loan deductions on leaving

Employees starting and leaving

When a new employee starts with an organisation, the employer needs to obtain several pieces of information to ensure that the employee can be paid correctly and on time.

At this stage, assume that the necessary pre-employment checks have been made. Pre-employment checks are not a direct payroll responsibility and should have been undertaken at the interview stage. These checks are to establish a prospective employee’s right to work in the UK under the Immigration, Asylum and Nationality Act 2006. See the Checking the employee’s right to work guidance note.

The basic employee details needed are:

  1. name ― forename(s) and surname (ensure these are the right way round)

  2. date of birth

  3. address

  4. gender

To ensure correct payment, the payroll operator will need to know the rate of pay, together with any other allowances that may be payable. The rate of pay should be at least equal to the appropriate national minimum wage / national living wage rate. See the National minimum wage ― overview guidance note and the GOV.UK website.

National insurance number (NINO)

Although not a mandatory item for employment law purposes, it is essential that a NINO is held for every employee. The NINO is the prime identifier used by HMRC and other government departments such as the Department for Work and Pensions (DWP). A valid NINO is in the format ‘aannnnnna’ where:

  1. aa is a valid alphabetic prefix

  2. nnnnnn is a six-digit number

  3. a is a suffix letter; one of A, B, C or D

See Example 1.

Where the NINO is not known, the field should be left blank. HMRC’s systems will reject files in their entirety even if only one NINO is invalid. There used to be a ‘temporary’ NINO format, but this is no longer accepted by HMRC.

See Example 2.

Note that not all combinations of prefix letters are used. The characters D, F, I, Q, U and V are not used as either the first or second letter of a NINO prefix.

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