If you have been using the wrong National Insurance letter code for one of your employees you will need to correct this. You will also need to inform HMRC so they can update their records as soon as possible. The means of doing this depends on whether the error is from the current tax year or a previous tax year.
NI letter code errors from a previous tax year
Corrections need to completed by sending an Early Year Update (EYU). This EYU can either be completed through your payroll software or through the HMRC’s free PAYE software. HMRC’s PAYE software can be downloaded online.
NI letter code errors from the current tax year
These letter codes need to be corrected within your current system. You will also need to backdate this to the start of the tax year for the previous payroll cycles effected. These changes will then be reported to HMRC on your next FPS (Full Payment Submission).