UK Employee Tax Definitions

You can view, add, and edit tax information for UK employees in the Payroll > Tax Definitions screen of People.

Dayforce can automatically generate default tax and NI details for employees if they haven’t been entered before a pay run calculation. For more information, see Automatic Employee UK Tax and NI Records.

UK Tax Info

Fields in the UK Tax Info section
Field	Descriptions
Effective From	The date range from when the tax information became effective to when it was changed or ended.
Effective To
Tax Code	The tax code, normally starting with a number and ending with a letter, used to determine how the employee’s pay or pension is taxed. This field supports up to 8 characters. Determining an employee’s tax code is often done using a P45, which employees get from an employer when they stop working for them. For more information about employee tax codes, see https://www.gov.uk/new-employee-tax-code. Also, if a new employee doesn't provide a P45, you can import prepaid tax information with the Prepaid Accumulation Data Import site level background job. For more information, see the Prepaid Accumulation Data Import Specification document.
Tax Basis	The tax basis for the tax code: Cumulative: When a tax code is cumulative, the period tax calculation uses taxable pay and year-to-date tax paid to determine the tax due for the period. Overpayments and underpayments from previous pay periods can be corrected in Payroll. Week1/Month1: When a tax code is noncumulative, also known as a Week1/Month1 tax code, the period tax calculation only references the account taxable pay in the current period. A Week1/Month1 tax code always treats earnings as if they're being paid in the first month of the tax year.
Change Reason	The reason for changing the employee’s tax information: P45 Update: New hire NI and tax taken from an employee’s P45. Starter Declaration Update: New hire NI and tax using a starter declaration when an employee doesn't have a P45. P6/P6B Update: Identified as P6 on the inbound HMRC update. P9 Update: Identified as P9 on the inbound HMRC update. New Pension Starter: The reason used when you change the employment type to "Pensioner" in the Employment Type tab in Employment > Employment Settings. Dayforce assumes pensioners use the NI letter X in the UK NI Info section.
Starter Declaration	How Dayforce populates default tax and NI details for employees. Selecting one of these options adds default values to the Tax Code and Tax Basis fields as follows.
Legal Entity	The legal entity associated with the record.
Previous Taxable Pay To Date	The employee's previous taxable pay and taxes paid, taken from the P45 issued by their previous employer. This information is used to make sure that the employee is taxed correctly in their first payment with the organisation.
Previous Tax To Date

List of starter declarations
Starter Declaration	Tax Code	Tax Basis
A	1257L	Cumulative
B	1257L	Week1/Month1
C	BR	Cumulative

UK NI Info

Fields in the UK NI Info section
Field	Descriptions
Effective From	The date range from when the information became effective to when it was changed or ended.
Effective To
Change Reason	The reason for changing the employee’s NI information: NI Letter Update Directorship Start Directorship End
Legal Entity	The legal entity associated with the record.
NI Letter	The National Insurance category letter. For more information about category letters, see https://www.gov.uk/national-insurance-rates-letters/category-letters.
Director	Indicates that the employee is a director. NI for directors is calculated on their annual earnings rather than periodic earnings. This field works with tax basis settings and the Annual checkbox.
Director Start Date	The date that the employee became a director.
Annual	This checkbox works with the Director checkbox to apply this-time banding.

Relationship between the Annual checkbox and tax basis settings
	Tax Basis `0` (cumulative)	Tax Basis `1` (non-cumulative)
Annual selected	Uses YTD earnings and bandings. Typical cumulative method.	Uses this-time banding, which increases as the period increases, but with YTD earnings throughout the year. Used if a Director is also an employee.
Annual cleared	Uses YTD earnings and bandings. Typical cumulative method.	Uses this-time earnings and bandings, which increase as the period increases. Typical non-cumulative method.

UK Student Loan

Fields in the UK Student Loan section
Field	Descriptions
Effective From	The date range from when the student loan started to when it was changed or ended.
Effective To
Student Loan Plan Type	The employee's student loan plan type (1, 2, 4, or 5). An employee's plan type depends on factors such as when they applied for loans and where they lived when they applied. For more information about plan types and thresholds, see gov.uk.
Legal Entity	The employee's legal entity.

UK Postgraduate Loan

Fields in the UK Postgraduate Loan section
Field	Descriptions
Effective From	The date range from when the student loan started to when it was changed or ended.
Effective To
Legal Entity	The employee's legal entity.

UK Irregular Payments

Employees who receive irregular payments can be, for example, casual workers or employees on long term sick leave. Because these employees don't receive regular payments, there is a possibility that the HMRC removes them from the employer's records, which could potentially lead to errors in tax filing.

In the UK Irregular Payments section, you can flag employees who receive irregular payments to identify them in the FPS file transmitted to HMRC. This ensures that they aren't removed from the employer's record by HMRC.

Fields in the UK Irregular Payments section
Field	Descriptions
Effective From	The date range of the irregular payments record.
Effective To	The date range of the irregular payments record.
Irregular Payments	Indicate in the FPS file that the employee receives irregular payments.
Legal Entity	The employee's legal entity.

Employee Payroll Tax

Columns in the Employee Payroll Tax section
Field	Descriptions
Tax Authority	The tax authority, name, type, and description to identify the tax.
Tax Type
Tax Name
Description
Employee Tax	Indicates that the tax is paid by the employee.
Employer Tax	Indicates that the tax is paid by the employer.
Legal Entity	The associated legal entity through which the employee is paid.