ICB clarifies two new RTI validation changes that are effective for paydays on and after 06 April 2025.
We also advise the action you should be taking as all surround HMRC validating the correct use of some National Insurance (NI) category letters:
Special Tax Sites
Where the employer has an eligible employee working in either a Freeport or Investment Zone, different NI letters will allow a higher Secondary Threshold:
|
Tax Site
|
Secondary Threshold
|
Value
|
NI Letters
|
|
Freeport
|
The Freeport Upper Secondary Threshold (FUST)
|
£25,000
|
F, I, S or L
|
|
Investment Zone
|
The Investment Zone Upper Secondary Threshold (IZUST)
|
£25,000
|
N, E, K or D
|
Collectively, Freeports and Investment Zones are referred to as Special Tax Sites by HMRC. From tax year 2025/26, where the employer uses a Special Tax Site NI letter (F, I, S, L, N, E, K or D), new RTI validation rules outlined in HMRC’s guidance to software developers ‘Changes between 2024 to 2025 and 2025 to 2026’ details that the FPS will reject if the new RTI field ‘Workplace postcode’ is not populated with the postcode at which the employee is working.
Action
- In the first instance, the workplace postcode information will have to be gathered;
- Secondly, the payroll system will have to be populated in a new data field contained in software. Contact your software provider and ask where they are putting this field
Remember that if F, I, S, L, N, E, K or D is used as a NI letter, the entire FPS will reject if the new RTI data field is not populated.
Reduced Rate Category Letters
This concerns NI letters B, I, E and T (for mariners). Until May 1977, married women and widows could elect to pay a reduced rate of National Insurance (at 1.85%) in return for a reduced State Pension in their own right and entitlement to some contributory benefits. HMRC’s FPS validation rules already state that the FPS will reject if the employee’s gender is set to male.
From tax year 2025/26, the FPS will also reject if the woman’s date of birth is after 05 April 1961.
Action
- Review all employees on a reduced rate NI letter (B, I, E and T). The employee’s date of birth in the payroll system must be on or before 05 April 1961.
For Bookkeepers
We hope that your payroll software will perform validation checks and will not allow the FPS to pass through without these new validation rules highlighted to you. ICB’s advice is to check this with your provider.
Primarily, however, you need to be acting if any of your employees is on a Special Tax Site or reduced rate NI letter.
