PeopleXD calculates NI on arrears for each month the arrears relate to, rather than on the total arrears payment. This means an employee who joined payroll late is not charged NI on earnings that would have been below the threshold if they had been paid on time.
šNote: This applies when an employee's start date is in the previous payroll period and they receive arrears.
Example
An employee starts in the July payroll period and is paid Ā£500 per month. Due to a late payroll entry, they are first paid in the August payroll period.
The August payment includes Ā£1,000 in total, covering July and August. The system applies the NI thresholds to each month separately:
July: Ā£500, which is below the Lower Earnings Limit of Ā£559 per month, so no NI is due.
August: Ā£500, which is also below the Lower Earnings Limit, so no NI is due.
Check the NI letter history
You can view how NI was calculated for an employee's arrears in their NI letter history. The system applies this calculation automatically.
To view this, follow the steps below in Portal.
Click Employees then highlight the required employee, then click View.
Click NI letter history.
šNote: The NI letter history shows the NI calculation for each month the arrears relate to.