Tax and National Insurance (NI) information for employees and organizations in the United Kingdom are configured in the Payroll > Tax Definitions screen of the People feature.
- The amounts for employee and employer NI contributions depend on the employees’ NI classes, categories, codes, and rates.
- The amounts of income tax an employer deducts from employees depends on employee tax codes and how much of their taxable income is above their personal allowance.
Dayforce uses separate tax info and NI records for each legal entity that an employee is associated with. This ensures employees are taxed correctly when they have concurrent work assignments in more than one legal entity, or transfer to a work assignment in a different legal entity.
After the last pay run of the tax year, a background job runs to update employee tax codes ending in L, M, or N. The updated values are provided by HMRC if they send a tax change notice (or P6 notice) for an employee. Dayforce carries forward any other tax codes that don’t end in L, M, or N, unless it has received a P6 update too late to use in the current tax year. For more information about tax code changes, see: https://www.gov.uk/employee-tax-codes/changes.