How to add a returning employee to payroll

This article explains how to add an employee back onto your payroll if you have re-employed them after previously removing them from your payroll and submitting their leaving details to HMRC.

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.

Before you start

You will need full (level 8) access to FreeAgent in order to add a returning employee to your payroll.

Please note that the process for adding an employee who has been re-employed back onto your payroll depends on whether the employee returns in the same tax year that they left, or a future tax year.

Adding an employee to payroll who has returned during the same tax year

Returning after the most recent pay period

If the employee’s leaving details were submitted to HMRC as part of your most recently filed payroll submission, the leaving date can be removed before your next month’s payroll submission, which will allow you to continue to file RTI submissions for the employee. However, before doing so, please consider the following.

The current guidance from HMRC indicates that you can remove the leaving date for an employee provided the P45 has not been issued to the employee. FreeAgent automatically produces a P45 when a leaving date is added to a payroll profile, which gives the employee access to the P45. When you remove a leaving date in FreeAgent, the P45 will no longer be available for the employee to access.

If you would like an employee’s leaving date to be removed in accordance with HMRC’s guidance, we strongly recommend checking with HMRC first to confirm this is the correct action to take. If you would then like to proceed, navigate to the relevant employee's payroll profile and select 'Remove Leaving Date' in the top-right corner.

Returning after subsequent pay periods

If you’ve filed payroll to HMRC since submitting the employee’s leaving details, you will need to create a new user profile for the employee and then follow the steps below to create a new payroll profile for them. Please note that you cannot use the employee’s original user profile to create the new payroll profile.

Navigate to the ‘My Money’ tab at the top of the screen and select ‘Payroll’ from the drop-down menu.

Select ‘Add an Employee’ from the right-hand side of the ‘Employees’ section and select the employee’s name from the drop-down menu. Make sure that you select the new user profile that you’ve created for the employee, not the original one that you used when they were previously employed.

Next you’ll be prompted to create a new payroll profile for the employee. Some information will be automatically filled in by FreeAgent based on the information that you provided in the employee's new user profile, but you will need to complete the remaining sections to create a new payroll profile for the employee. For more information about creating a payroll profile, please see this article.

If you assigned a unique ‘Payroll ID’ to the employee in their original payroll profile, make sure to enter a different one in the ‘Employment Details’ section of their new payroll profile and select that the individual is ‘A new employee’. For more details, please refer to HMRC’s guidance.

Once all the relevant information has been entered, select ‘Create Payroll Profile’ at the bottom of the screen to create a new payroll profile for the returning employee. After creating this new payroll profile, they’ll be included on your next RTI submission when you prepare and file your payroll to HMRC.

Adding an employee to payroll who has returned in a future tax year

If the employee returns in a future tax year, you should use their existing user profile and existing payroll profile in FreeAgent. You may need to edit their payroll profile, to update their tax code for example.

Navigate to the ‘My Money’ tab at the top of the screen and select ‘Payroll’ from the drop-down menu.

Select ‘Add an Employee’ from the right-hand side of the ‘Employees’ section and select the employee’s name from the drop-down menu.

Next, you’ll be prompted to complete the payroll profile for the employee. Some information will be automatically filled in by FreeAgent based on the information that you provided in the employee's original user profile, but you will need to complete the remaining sections to create a payroll profile for the returning employee. For more details, please see this article.

If you assigned a unique ‘Payroll ID’ to the employee’s payroll profile for HMRC to use in any correspondence with you during the employee’s first period of employment, enter a different one in the ‘Employment Details’ section of their payroll profile for this period of employment. For more details, please refer to HMRC’s guidance.

Once all the relevant information has been entered, select ‘Create Payroll Profile’ at the bottom of the screen to complete the process. After creating the payroll profile, the new employee will be included on your next RTI submission when you prepare and file your payroll to HMRC.