How do I process a new starter?
Article ID
11240
Article Name
How do I process a new starter?
Created Date
21st November 2019
Product
IRIS Payroll Professional, Earnie, IRIS Earnie IQ
Problem
I have a new starter in my company, how do I report this to HMRC under RTI?
Resolution
We no longer send separate p45 / p46 documents under RTI. All starter details are included in the regular FPS submissions you send every pay period. You need to create the new employee record and process your payroll as normal, any new starter details will be included in your next FPS submission which, as always, is expected by HMRC on or before your pay date.
Note: All new employees need to complete a Starter Form. This is very similar to the old p46 but needs to be completed by all new starters even if they have a valid p45 from the previous employment.
Required Employee Information
Surname
Forename
Date of Birth
Date Started
Starter Details (Starter form – previously known as p46)
Address – first 2 lines and postcode
Desirable Employee Information
NI number is desirable; however not knowing the NI Number for some of your employees will not stop submission to HMRC
Normal hours worked per week
Information required for new starters in certain circumstances
Irregular Payment (if applicable to an employee, requires completion prior to your first Full Payment Submission)
Passport number
How to process a new starter with a P45
Create new employee via the “Employee” > “Add New Employee”
Complete the employee personal details but leave out the p45 details for the time being
Click “Starter Details”.
Tick ‘Student Loan Deduction’, if stated on P45. For details on which plan type to use see below.
Tick the appropriate response on the Starting Declaration. Click “OK”.
Replace the tax code to match the p45.
Enter the to-date figures from the P45. Under the “P45 Details” section type in the “Gross Pay” and “Tax Paid Values”
Click “Save” and “OK”
NOTE: The option chosen on the new starter form will set the tax code. It is important that you change the tax code to match the p45 AFTER you save the option on the new starter form.
How to process a new starter without a P45
Create new employee via the “Employee” > “Add New Employee”
Complete the employee personal details but leave the “Tax Code” field blank. This will be automatically set based on the option chosen on the starter form.
Click “Starter Details”
Tick the required response on the Starting Declaration, these are the same declarations you would have previously seen on a P46. The employee should select the most appropriate response.
If the employee is unavailable to choose the appropriate option you can select the option “P46 not complete”.
Click ‘OK’
The option selected sets the tax code as follows (18/19 tax year):
- Option A – 1250L Cumulative
Option B – 1250L Week1 / Month 1
Option C – BR Cumulative
Employee Statement not complete – 0T Week 1 / Month 1
Use the tax code selected until informed otherwise by the HMRC.
Receiving a P45 after the employees first payday
If a new starter gives you a P45 after their first payday but you have already submitted the FPS for that pay period and you have already received the employee’s tax code from your Tax Office you should:
Disregard the tax code on the P45
Continue to use the tax code received from HMRC
Enter the Gross Pay and Tax Paid figures from the P45 in Employee Details > Tax/NI > P45 Details
However, if you haven’t received a tax code for the employee from HMRC:
Confirm the figures on the P45 are correct and enter the relevant tax code in Employee Details > Tax/NI tab
Enter the Gross Pay and Tax Paid figures from the P45 in Employee Details > Tax/NI tab > P45 Details.
Automatic Enrolment (Workplace Pension Reform) of new starters.
If you are using the IRIS AE Suite as part of payroll to assess and enrol employees, any new starters would be assessed for eligibility when you process their first payroll. You shouldn’t normally need to enter any details in either the Pension or Auto-Enrol tabs as these are completed automatically during assessment/enrolment.
If they are deemed to be eligible job holders when the assessment occurs they will be enrolled or postponed as per your settings in “Pension” > “Configure Auto Enrolment” > “Pensions“
In the example pictured above, if a new starter is assessed as eligible in their 1st pay they would then be postponed 3 months from their recorded start date. An exception to this rule occurs when the new starter isn’t included in payroll for more than one pay period from their start date, eg start date falls in month 1, employee isn’t paid and assessed until month 3. In this scenario, any postponement selected would apply from the start of the pay reference period where assessment occurred.
Student Loan Plan Type
As of the 2016/17 tax year there is now an option of which student loan plan type the employee should be set to. The difference in the plan types is the threshold at which deduction will begin. The threshold for plan type 1 (19/20 tax year) is £18,935. The threshold for plan type 2 (19/20 tax year) is £25,725. BOTH plan types calculate deduction at 9% of the NIC liable pay. When you receive the SL1 from HMRC it will specify which plan type to use.
Please Note: There is no provision on the p45 form to indicate which plan type an employee should be on. When you add a new starter to the system, the employee needs to confirm the following;
Did they live in Scotland or Northern Ireland when they started the course? OR
Did they live in England or Wales and started the course before 1 September 2012?
If so, set them to plan type 1.
Did they live in England or Wales and started the course on or after 1 September 2012.
If so, set them to plan type 2.
If your employee cannot confirm these details, ask them to contact the Student Loan Company (SLC). If they’re still unable to confirm their plan type, start making deductions using plan type 1 until you receive further instructions from HMRC.
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