Add an employee's tax and pension information
Add an employee’s tax information to payroll. You can then set up the employee for auto enrolment in your pension scheme.
Before you start
- Set up your organisation for pensions
- Add an employee to payroll in Xero
- Add deduction pay items for pensions and student loans
How it works
- Enter the employee's tax details into the Taxes tab. You can start entering these details, even if the employee hasn’t supplied a P45 yet.
- Add pension settings for the employee. Xero will then assess the employee for auto enrolment. The assessment takes place when you post a pay run on, or after, your staging or postponement date.
Add an employee's tax information
- In the Payroll menu, select Employees.
- Click the employee's name to open their details.
- In the Taxes tab, select the employee’s Starter type and Starter declaration.
- (Optional) Adjust the employee's Tax code and the W1/M1 (Non-cumulative) checkbox.
- For a new employee with a P45: enter the employee's Previous taxable pay and Previous tax paid.
- For a new employee without a P45: you can add the employee's previous pay and tax at a later date. To do this, click Enter data from P45, then enter the employee's Previous taxable pay and Previous tax paid.
- Select whether the employee has student loans. If so, select the student loan type.
- Select whether the employee is a director. If so:
- Select the employee's Directorship Start Date.
- Select the employee's NICs Calculation Method.
- Click Continue.
Add an employee to your pension scheme
- In the Pension tab, select whether or not to postpone auto enrolment.
- Leave Eligibility Status and Eligibility Status Date. Xero will populate these fields when you post a pay run.
- Select whether the employee is in a pension scheme:
- If No, Xero assesses the employee for auto enrolment, and adds pension pay items to their pay template.
- If Yes, Xero won’t assess the employee for auto enrolment. Instead, you’ll need to add employee pension contributions to their pay template.
- Under Excluded from Auto Enrolment?, select to include or exclude the employee.
- Leave Opt Out Reason, Opt Out Date and Opt In Date. If applicable, you can return to these fields after Xero has assessed the employee for auto enrolment.
- (Optional) Add Pension Group, Pension Subgroup and Member Plan Number.
- Click Save.