How to move your payroll to FreeAgent from another software provider

This article explains how to move your RTI payroll to FreeAgent at any point during the tax year by using the year-to-date figures from your previous payroll system.

Please note that FreeAgent's payroll functionality won't be available if you have an unincorporated landlord or non-UK account type, or if you're preparing your accounts using cash basis accounting.

If you’ve been filing payroll to HMRC outside of FreeAgent for the first part of the tax year and are switching to FreeAgent to file for the rest of the tax year, you’ll need to enter year-to-date totals, including the previous pay they've had this tax year, when creating payroll profiles for your employees as described below.

You'll also need to do this if you’ve been posting payroll journals for the first part of the tax year and wish to create payslips in FreeAgent for the remainder of the tax year.

If you’re setting up payroll in FreeAgent from the beginning of the tax year, or mirroring payslips already produced, find out how to set up and run payroll.

FreeAgent uses HMRC’s calculations when deducting tax and NI, but please note that other software providers may use slightly different methods of calculation for these deductions, so it’s worth keeping this in mind when reproducing payslips that have been previously created elsewhere. If you are unsure, please check with your accountant for the best method to use.

Before you start

In order to set up payroll in FreeAgent, you need to have full (level 8) access to your FreeAgent account.

Each employee who will be included on your payroll will also need to be added as a user in FreeAgent.

Creating a payroll profile

You will create your first payroll profile, and any additional ones you need, when you set up payroll in FreeAgent. Each employee should have their own payroll profile and a profile should never be updated and used for another employee.

Employment details

In the 'Employment Details' section, select that the individual is ‘An existing employee’ from the ‘This person is’ options.

If you used a payroll ID for the employee in your previous payroll system, for HMRC to reference in any correspondence with you, enter the same number in the ‘Payroll ID’ field in FreeAgent.

Previous pay this tax year

In the 'Previous Pay This Tax Year' section, select ‘This person has been paid for this employment since 06 Apr [X]’.

Enter year-to-date totals

Enter all the year-to-date totals you have for the employee, including pay, deductions, statutory pay, employee pension contributions and earnings by NI category letter. The figures entered into a payroll profile will be pulled through to an employee’s P60.

Employer pension contributions to date are not included in these totals, as there’s no requirement to send that information to HMRC. If you require that total on the payslips going forward, we’d recommend you recreate the payslips instead from the start of the tax year, by setting up and running payroll.

Enter earnings by NI category letter

Each time an employee is paid, their National Insurance (NI) category letter is used to work out how much National Insurance the employee and employer need to contribute.

To calculate National Insurance for the rest of this year's payroll, you will need to enter an NI letter to reflect how much NI has been paid for the employee during this employment to date. Which NI letter you use will depend on whether their NI letter has remained the same or changed during the tax year to date.

For more information on which NI letter to use for an employee, please refer to HMRC’s guidance.

If the employee's NI category letter has remained the same during the tax year to date

Select the relevant NI category letter used for these earnings and then fill in the relevant fields with the following options:

• Gross Pay for NI: the gross pay total to date for the NI letter.
• At LEL (Lower Earnings Limit): the total earnings to date for the NI letter at the LEL (where earnings are equal to or exceed the LEL).
• LEL to PT (Lower Earnings Limit to Primary Threshold): the total earnings to date for the NI letter above the LEL, up to and including the PT.
• PT to UEL (Primary Threshold to Upper Earnings Limit): the total earnings to date for the NI letter above the PT, up to and including the UEL.
• Employer NICs: the employer's National Insurance Contribution total to date for the NI letter.
• Employee NICs: the employee's National Insurance Contribution total to date for the NI letter.

If the employee's NI letter has changed during the tax year to date

If the total earnings to date for an employee were split between more than one NI letter, select ‘Add Another Category’ to add additional NI letters and split the earnings.

For example, an employee might have used NI letter A during Month 1 payroll, while for Months 2 to 5 they switched to NI letter B. In this instance, if you were moving your payroll to FreeAgent in Month 6, you would need to split the earnings to date for this employee between NI letter A (total Month 1 earnings) and NI letter B (total Months 2 to 5 earnings) and enter them as two separate line entries under 'Earnings by NI Category Letter'.

Once you have entered all of the relevant information for the employee, select ‘Create Payroll Profile’ at the bottom of the screen to complete the process. Find out more about how to create a payroll profile.

After you've created a payroll profile for each employee on your payroll, including any year-to-date totals, you can run and report your next monthly payroll using FreeAgent.

Please note that you will still need to create payroll journals for the previous months of the tax year (e.g. Months 1 to 3, if you’re moving your payroll to FreeAgent in Month 4) in order to bring this information into your accounts.

Moving forward, filing RTI payroll through FreeAgent will update your accounts automatically, so that from the current month (e.g. Month 4) onwards you will not need to post payroll journals.