This article will help you understand the full employment section for a Contractor / Contractor as Employee.

The Employment section is where you view/edit the employment info such as Tax Code, Student Loan or Payment Frequency from a maintenance point of view.

It is also where the initial setup takes place, see screen below.

When creating the employment details for the worker this page is designed to be completed from top to bottom. Splitting each component into their own little sections for ease.

The first section, for Company ID contains the employee number and RTI payroll ID. Both will be auto generated once this page is filled in and saved.

The second section, for Tax Details is where you will populate the initial tax code. For new starters you will either have them complete a P46 New Starter Declaration or the worker will have handed you a P45.

These are your available options via the dropdown with a table detailing which option is used for and how it applies in our system.

The third section, for National Insurance is where you will populate the contractors NINO.

A National Insurance Number (NINO) is used for HMRC to allocate the contributions taken on the payroll to the contractor’s record. It isn’t needed for payroll to be ran, but is recommended to have on their record asap for FPS purposes.

The NI category will be driven from the contractors DOB. If needed you can override this by ticking the button, see below a list of all options along with a Table for when they’re to be used.

The fourth section is where you will apply any Student Loan or Post Graduate Loan should the contractor have one.

A contractor will notify you if SL (Student Loan) is to be deducted on the P46 Starter Form. A P45 can also show a SL is due as shown below.

If there is a ‘Y’ on the P45 then apply Plan 1 as the P45 will not state which plan. HMRC will update you if it should be Plan 2.

As for Post Graduate Loans the dropdown options are shown below.

Again, the contractor will state on a P46 form if one is applicable or HMRC will update you after the first payment.

The fifth and final employment section is for details such as payment frequency, start date and leave date (if applicable) as shown below.

Payment Frequency can either be Weekly or Monthly.

You can change the frequency at a later date if the contractor requests. Just ensure the change is processed at the end of the current pay period to avoid any potential issues.

Employment Type can either be Permanent or Contract and this dictates how HMRC see their employment on an FPS.

The payroll settings section is where you can edit settings such as the contractors expense type, custom margin and so on. Example screen shown below.

As you can see the page again is split into different sections to keep the page easy to read and understand.

The first section is for the expense type.

As you can see below, the expense type for the contractor is chosen via a dropdown list.

The available types will be shown below with a table stating what each type means.

The second section is where you can edit the margin this contractor is charged, or even set a number of free periods to be processed.

Knowing that margins are set at customer level, if you wish to charge a contractor a different margin you can set this up at people level. To do so, tick the custom margin box, this will let you type in the margin value. In my example below, you can see this worker will be charged £20.

The third section is where you can edit the holiday pay setting at people level. By default, the system will apply the chosen setting at company level. If you wish to override it you can select the treatment via the dropdown as shown here.

The fourth section is where you can edit their PAYE setting if needed. This is used when you need to apply certain PAYE calculations to a payment (s).

A dropdown of the possible options is displayed below, each selection will allow you to select different settings.

Use Company Settings

PAYE

Selecting this will apply all applicable PAYE deductions to this worker's payroll. It will factor in NMW, Holiday Pay and Pension.

An ‘Off-Payroll Worker’ tickbox will appear, allowing you to report this contractor as such to HMRC via FPS.

S/E – PAYE

Selecting this will apply the standard PAYE deductions but it will not factor in NMW, Holiday Pay or Pension.

If this setting is selected, you will be able to restrict expenses under the primary threshold for NI. Meaning earnings up to that threshold are protected and cannot be lowered by expenses.

An ‘Off-Payroll Worker’ tickbox will also appear, allowing you to report this contractor as such to HMRC via FPS.

The bank section is where you fill in the banking details for the contractor, these details are where the payments will be sent for payrolls. You can enter a Bank Account or Building Society by default. If the individual uses an international account, you will need to enable them at International Bank Settings.

See example screens below.

Bank Account

Building Society

International Account

The Pension section is an overview of their scheme start, current status and type. It’s only populated after the individual has had their first pay ran.

If and when they are enrolled, you can also edit things just as the contribution rate should the individual wish to raise the percentage. Or even do so through AVC (Additional Voluntary Contributions)

You can also edit the scheme type to Net Pay Arrangement/Relief at Source/Salary Sacrifice for this individual should you wish.

Example screens below.

Override Pension Contribution

By selecting the tick box you will be able to set the desired contributions for this contractor at employee and employer level. In my example I have set the employers to 6% and the employees to remain at the standard 5%.

You can opt to set the contributions to a set amount by selecting ‘£’ via the dropdown.

Just keep in mind the minimum contributions are:
​
Employers – 3%
Employees – 5%

Additional Voluntary Contributions

By selecting this tick box you will be able to set the desired AVC for this contractors record. In the example I have set the AVC at an extra £50.

The contractor will see this on their payslip as ‘Pension AVC’, shown here.

Pension Scheme Type Override

By selecting this tick box you will be able to override the company pension type for this contractor should you wish.

The YTD Declaration section is where you can find all YTD figures for taxable pay, tax paid, NI paid, mileage etc.

It is also where you will enter any P45 figures if a worker has sent you theirs from a previous job.

You can expand the NI section by clicking on the small arrow at the right hand side. You will then see the below.

If you wish to see the NIable pay paid on a certain category you can use the filter, you can select any NI code and if the worker has been paid on that code then the figures will populate.

You can expand the pension section by clicking on the small arrow at the right hand side. You will then see the below.

The Assignment section is where you can see all assignments this individual has been linked to, be it past, present or future assignments. You can also create/ edit an assignment delete them from this screen.

Example screen below.

If you are on the assignment tab, select the ‘+Create’ button, highlighted below.

You will then have ‘Create Assignment’ as a sliding tab on the screen shown below.

The below section is what how to complete each field. Remember, only those with a red asterisk are required for creation.

Customer Name - You will need to select which Customer (agency) the Contractor is working via. Choose from your existing Customers in the drop down. To learn more about creating customers please refer to Creating/Editing Customers.

Unique Agency Identifier - This is a free text field which can be used for matching your assignment to timesheet data you receive from the agency. If the agency provides a reference from their system which helps them distinguish between contractors then populating this field can be useful when you are importing timesheets and sending invoices for reconciliation purposes.

Start Date - Enter the start date of the assignment here, no invoices can be raised with a date earlier than this date for this assignment.

End Date - Enter the end date of the assignment here, by default this will auto populate to 2 years in the future from the start date entered. No invoices can be raised with a date later than this date for this assignment.

Location - This is a free text field where you can capture the location of the site.

End Client - This is a free text field where you can capture the name of the end client.

Annual Leave - Enter the number of days annual leave that the contractor would be entitled to on this assignment if they were to work a full year. This number will form the basis of the holiday pay calculation. If you leave this field blank, the system will default this value to the current UK statutory minimum.

Notice Period - This is free text field where you can capture the notice period.

Currency - This will be set to GBP as a default, currently the system only processes GBP.

Under Supervision - Is the individual under supervision direction and control? This will determine if the contractor is eligible to claim reimbursable expenses.

Is Multisite - Is this person travelling from one single base to several sites meaning they are eligible to claim tax relief for mileage in accordance with HMRC?

Additional Information - This field is a free text field to add anything else that may be required that is not covered by the above fields.

Hours in a Day for Day Rate override - If you toggle this on the hours in a day rate can be adjusted so that they do not follow the company settings (see Payroll Settings for how to set up the company default)

Hours in a Day for Day Rate - This box will only be visible if the Hours in a Day for Day Rate override is toggle on. Enter a numerical value into this box, this number will be the hours used if a day rate is processed for payroll in the NMW calculation.

Use Guaranteed Pay Rate - Toggle this on if you want the contractor to receive a guaranteed rate in their net pay.

Guaranteed Pay Rate - This box will only be visible if Use Guaranteed Pay Rate is toggle on. Enter the rate of pay you wish to guarantee the contractor.

Once created, you can edit an assignment by clicking the edit icon highlighted below

The assignment details will appear on a sliding screen and you can edit most of the fields.

There are certain things which aren’t editable. Such as, Customer, Worker/People and Start Date. Once you’ve made the changes, select the 'Update' button and your changes will now be actioned.