How do I set up payroll adjustments?

Summary

This article explains how to enter the pre/post tax additions/deductions applicable to your payroll.

More Information

To enable you to make pre/post tax additions/deductions to your payroll, e.g. Commission, Nights Out or Expenses you need to create Adjustments.

To enable you to make deductions for outside agencies e.g. Student Loans, Tax Credits, County Court Judgements etc, you need to create Attachments.

The system has room for up to 14 adjustments/attachments.

The actual amounts, which are either added or deducted from the Employee, are input during the Payroll Run or can be specified on the employee record if they are to be regular additions/deductions.

Attachments are created from the relevant paperwork you receive for the employee e.g. from the county court or student loan agency. These usually involve a regular deduction at a specific rate or percentage of earnings.

Setting up Standard Adjustments

Go to " Payroll Payroll Settings Period Adjustments"

You should not amend the settings for an Adjustment which has been used in the current tax year or for an Attachment which has been, and is still, in use.

The different types of Adjustment and Attachment are described below:

Commission, Bonuses etc

Enter a "Description" for the Adjustment (max 15 characters) e.g. 'Bonus'.

Press <Enter> to move across the Adjustment line to configure the settings for this adjustment in the following way.

Sign

Enter '+' if values entered for this Adjustment are to be an addition to pay.
Enter '-' if values entered for this Adjustment are to be a deduction from pay.

Tax

Enter 'Y' if this is a 'Pre-Tax Adjustment' i.e. Taxable Additions and Non-Taxable Deductions.
Enter 'N' if this is a 'Post-Tax Adjustment' i.e. Taxable Deductions and Non-Taxable Additions.

NI (National Insurance)

Enter 'Y' if this is a 'Pre-NI Adjustment' i.e. Additions subject to NI and Deductions not subject to NI.
Enter 'N' if this is a 'Post-NI Adjustment' i.e. Additions not subject to NI and Deductions subject to NI.

Pen (Pensions)

Enter 'Y' if this Adjustment is to be included in Pension calculations.
Enter 'N' if this Adjustment is not to be included in Pension calculations.

Hol (Holiday Pay)

Enter 'Y' if this Adjustment is to be included in Holiday Pay calculations.
Enter 'N' if this Adjustment is not to be included in Holiday Pay calculations.

Order

This column is to specify the order in which calculations are carried out. Some adjustments/attachments can be forced to be carried out before others, as the calculation may need to be based on the employees pay e.g. Tax Credits should not be included in the calculation for Student Loans.

Standard Adjustments should be set at '10' e.g. Bonuses, Nights Out, Commission.
Holiday Credits are set at '30'.

Press <Esc> to exit. The adjustments will now appear as columns in your " Run Payroll" screen.

Attachments/Special Adjustments

To make deductions from an employee on behalf of an agency, e.g. Student Loans or the Child Support Agency, follow these instructions to set the parameters then follow this article to enter the details for the specific employee.

If the attachment is for Tax Credit deductions press <F7>. The settings will be completed for you.
If the attachment is for Student Loans press <Shift+F7>. The settings will be completed for you.
For any other attachments leave all fields blank and use your arrow keys to move across to the column headed "Attachments/Special Adjustments".
Press <Ctrl+F1> and click [List] to view existing agency codes.
Select the agency from the list and click [Choose]. The settings will be completed for you.
- To add a new Agency e.g. Cycle to Work Scheme or HMRC, click [Add].
- Enter a 3 character code.
- Enter the name/type of Agency (max 30 characters).
- Click on the [Settings] tab and enter the agency "Contact Information".
- Specify the "Type" from the drop down menu i.e. are deductions on behalf of this agency an amount or percentage of pay?
- Enter the default "protected" earnings status for all new attachment orders entered for this agency.
- You may leave the values blank as you will be able to specify these per employee.
Click [Done] and [Accept].
The parameters will be completed for you based on a typical agency.

You must make every effort to ensure these settings are accurate. If in doubt please speak to the agency concerned to confirm how deductions should be treated.

Press <Esc> to exit. See How do I assign attachments to an employee?.

Holiday Credits

You will see at the bottom of the screen, an adjustment without a number 'Holiday Credit'. This is already set up for the system to be able to calculate Holiday Credit additions/deductions if you decide to use the Holiday Credit scheme.

Example Adjustments

The section below shows you how to create the most popular adjustments:

Example 1: Holiday Pay

On the first available line, enter the description for the Adjustment

Holiday Pay.

Using the arrow keys, on your keyboard, move across the row entering the relevant settings:
Holiday Pay will be Positive as it is an addition to pay.
Tax will be 'Y' as it is a Pre-Tax Adjustment.
NI will be 'Y' as it is a Pre-NI Adjustment.
Whether you require it to be included in pension contributions is your choice.
Hol needs to be 'N' as a Holiday Pay Adjustment will usually be used instead of the Holiday Entry option.
Order should be '10'.
This is not an Attachment so it does not need an Agency Code.
When you have filled in the settings, the details are stored automatically.
When the Payroll is run you will be able to enter a value, in the Holiday Pay Adjustment, to pay an employee for an odd holiday day (or days).

Example 2: Expenses

On the first available line, enter the description for the Adjustment.

Expenses

Using the arrow keys, on your keyboard, move across the row entering the relevant settings:
Holiday Pay will be Positive as it is an addition to pay.
Tax will be 'N' as most expenses will not be subject to Tax.
NI will be 'N' as most expenses will not be subject to NI.
Pension will be 'N' as expenses will not affect pension contributions.
Hol needs to be 'N' as this entry is not for holiday pay.
Order should be '10'.
This is not an Attachment so it does not need an Agency Code.
When you have filled in the settings, the details are stored automatically.
When the Payroll is run you will be able to enter a value, in the Expense Adjustment, to pay an employee for any expenses they submit.

Deleting Adjustments

If you need to delete a Period Adjustment, press <F10> while the cursor is on the line you wish to delete.

Do not delete any Adjustments which have already been used during the current Tax Year.