Monthly "is this the last payment to the director in the tax year" yes/no selector
When a director leaves mid-tax year and the PAYE scheme is being closed as well, the annual reassessment of National Insurance needs to happen when they leave. It can't wait until 5th April.
When running payroll in HMRC Basic PAYE Tools, the user is asked to confirm whether this is the last payment to the director in the tax year. Xero doesn't ask this.
Xero payroll needs to be updated, so that it checks whether each salary payment is the last payment in the tax year, for any director whose NI is calculated on the alternative basis. If the user answers "no", then payroll gets calculated as normal. If the user answers "yes", Xero will need to perform the annual reassessment of NI contributions.
This is necessary to ensure that NI deductions are correct for any director who leaves mid-year but, up until that point, was on the alternative method.
Jill Blofield
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