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New NI category letters M, Z, I and K for under 21s


Opera has been changed so that the new NI category letters are automatically allocated to employees who are under 21. To make the transition easier, both the End of Year Cleardown and the Calculation commands will ensure that relevant employees use the correct NI letter. There are also changes to the user interface, reports, validation and so on.

End of Year Cleardown

The End of Year Cleardown command (accessed from the Payroll – EOY/Special Reports menu) will automatically update each employee’s NI category if they are under 21 at the first usual pay date in the new tax year.

Note: Deferred NI categories are not used at the start of a tax year so the standard rate letters M and I are used for J and L letters. People wanting to defer NI contributions because they have more than one job and will earn above the Upper Earnings Limit must apply to HMRC using form CA2700. The CA2700 certificate lasts for one complete tax year.

Employee details

The new NI category letters on the Payroll – Processing form are shown at the bottom of the drop down list of the N.I. Code box, as follows:

I – COSR Standard (Under 21)

K – COSR Deferred (Under 21)

M – Not contracted out standard rate (Under 21)

Z – Not contracted out deferred rate (Under 21).

Note: Opera uses the employee’s date of birth and the usual pay date for the period to make sure they are below 21 before allowing the new NI category letters to be used.

SCON validation

NI category letters I and K (COSR Standard (Under 21) and COSR Deferred (Under 21)) are included whenever Scheme Contracted Out Numbers (SCON) numbers are checked and validated for employees in Contracted Out Salary Related (COSR) pension schemes.

These areas in Payroll are affected:

• Processing - To-date

• Processing - Details & Bank

• Processing - Pensions - Employee Pensions

• Global Changes - Pension Scheme Transfer

• Maintenance - Pension Scheme.

Payroll calculation

The Calculation automatically checks each employee’s date of birth at the usual pay date. If they turn 21 at the usual pay date their NI category letter will either be changed automatically to the correct letter or a warning message will be displayed.

Departmental Analysis report

The NI summary section of the Departmental Analysis report includes the new NI category letters I, K, M and Z.

Adjust NI

The Adjust NI command is used to make changes to an employee's NI figures retrospectively for the current tax year. The new NI category letters are shown at the bottom of the drop down list of the N.I. Code box, as follows:

I – COSR Standard (Under 21)

K – COSR Deferred (Under 21)

M – Not contracted out standard rate (Under 21)

Z – Not contracted out deferred rate (Under 21).

Note: Opera checks the employee’s date of birth to make sure they are below 21 before allowing the new NI category letters to be used.

PAYE, NI & Statutory Payments

The rates for the new NI category letters are shown on the NI ER’s and NI EE’s tabs of this form (accessed from the Payroll – Utilities menu).

The I, K and M columns were previously used for the NI category letters F, G and S. These codes were used for employees in Contracted Out Money Purchase (COMP) schemes (abolished from 6 April 2012).

Disclaimer: This document is intended to provide general advice and has been prepared as a guide only. It is the user’s responsibility to decide how they want to proceed with the information given. Intsys UK Ltd accepts no responsibility for any errors, omissions, or misleading statements on these pages.


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