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Deduction & Pension Admin

Use

Use this option to record any deductions to be taken from the employee's pay. For example, Pension Deduction, Attachments and other deductions such as Payroll Giving, Christmas Funds etc.

In this section, you can select a deduction item from the list of preset Deduction items displayed in the drop down, or create your own. The preset deductions have been setup according to statutory requirements specifying whether or not they are exempt from PAYE tax, NI or Pension contributions. All presets have been set as non-recurring, i.e. when selected they will only apply to the subsequent payrun. After the YTD has been updated for this payrun they will be cleared and will not automatically reoccur.

The non-recurring occurrence of preset items cannot be changed. If you want to implement a deduction item with a recurring occurrence you should go to Deduction Setup in the Chart of Setup and enter the new item with an occurrence defined as recurring. When creating the new item you must also specify if the item is exempt from PAYE tax, NI and/or pension contributions. A recurring Deduction item will remain and apply to the payrun even after a YTD update has been done. Since they are recurring, their details remain displayed for the next payrun.

For example, Payroll Giving has been pre-set as non-recurring. If you require an employees Payroll Giving donation to be a regular repetitive event, you must enter a new deduction item, perhaps called 'Payroll Giving Regular' to distinguish it from the preset 'Payroll Giving' and define it as recurring. This means you do not need to enter the same data each period.

Path

Payrun > Payment Frequency (Weekly/Monthly/2 Weekly/4 Weekly/Quarterly/Annual/Bi-annual) > Deduction & Pension

Fields Available

Fields marked with an asterisk (*) are mandatory.

D1. Absence Deduction & Record

If an employee/Director takes any unpaid leave from work for any reason, the details of the absence and deduction should be entered in this section. Examples include Unpaid Suspension, Unpaid Educational Leave, Unpaid Trade Dispute etc.

Absence Records

After you have run the payroll and updated the YTD, any entries in this section will be cleared. If you wish to view any previous Absence Deduction records you can do so in the Reports-Absence Summary section where the past records can be displayed as statistical reports.

Note regarding the recording of absences:

Employee's absences, both paid and unpaid, are recorded in the payrun section. payrun basically records the total time the employee works for the company. If during the working day an employee fails to turn up for work, this absence time ought to be recorded. If the absence time is paid it will be recorded, i.e. as holiday absence, paid study leave, paid time off for trade union meetings. In a similar manner time off for SSP, SMP, SAP, SPP etc., is also recorded. It is also possible to record any absences that are not paid i.e. perhaps for lateness, unauthorised leave, etc.

If all absences, paid and unpaid, are recorded, you can easily create an audit trail of an employee's working hours in a year. An employee's pay and absence record could be further reconciled for auditing purpose to double check to see whether the employee was correctly paid, and not over or under paid. It is possible, by tracing through an audit of the absence records, to find out whether or not an employee's unauthorised absences were paid.

Absence Deduction Type: The list of absence deductions has been provided here. Select the appropriate absence deduction type to be assigned to the employee. Our service allows you to customise further absence types. If none of the listed absence deductions satisfies you requirement, you can create your own absence deduction type by using the Absence Deduction & Record Setup in the Chart of Setup section.

For Statistical Purpose

The data you enter here will purely be saved for record keeping/reporting purposes. The dates you enter here will not have any effect on the payroll calculation.

From Date: Enter here the date on which the absence started. You can use the calendar button to enter the date.
To Date: Enter here the date on which the absence ended. You can use the calendar button to enter the date.
Day or No.: Enter here the number of working days the absence covered to the nearest half a day (0.5)

Deduction Amount

The data you enter here will be used for payroll calculation. So please be careful and enter accurate data.

Hour or No.: Enter here the number of working hours the employee was absent for.
Rate: Enter here the hourly rate of deduction for the absence.
Amount: The amount displayed here is calculated by the package as hours multiplied by rate.
Action: The various tasks associated with the data in each row will be displayed here. For example Save, Edit, Delete, etc.

D2. Pension Deduction

Details of Pension providers and pension schemes are entered in the Employer / Contractor Pension Provider and Pension Scheme setup section. At the payrun stage, the pension schemes can be applied to the individual employees and deduction values entered as appropriate.

Once applied the pension deductions will automatically recur as appropriate in each payrun. This means that whenever the pay is run for this employee, the pension deductions will be implemented subject to the conditions of the pension scheme as detailed in the setup i.e., deductions will be made if the employees wage is sufficient to cover the contributions etc.

Although they are recurring, they will not automatically re-run unless you tick to select the employee concerned to do the payrun and then click on the Process Pay button. Pension deductions will only be produced after the tick is made. You need to remember to tick the employee if anything needs to be done. The payslip, which advises of the pension deduction payment, will not be produced if no tick is made against the employee concerned. In short, recurring items will not run until the employee concerned in the particular period is ticked when the pay is processed.

Scheme Name: This field will display the relevant pension deduction scheme applicable to the chosen employee. To add a new pension deduction scheme, select the pension type from the Select drop down list and click on the Add New Scheme button.

Pension Type: This field will display the relevant pension type that you have selected for the chosen employee.
Employee Pension Ref.: If you have entered the employee pension reference when adding the pension scheme for the employee, it will be displayed here.
Other Ref.: If you have entered any other reference when adding the pension scheme for the employee, it will be displayed here.
Status: This field displays the status of the pension scheme applicable to the employee, i.e. whether it is active or on hold. To change the status, click on the Edit link corresponding to the respective pension scheme.
Deduct after Tax: If you have allowed tax relief to the scheme you have selected, the pension contributions will be excluded from the employee's gross pay before the PAYE tax is calculated. It will be deducted after the PAYE tax is calculated. This is again subject to the scheme you have selected.
Deduct after NIC: If you have allowed tax relief to the scheme you have selected, the pension contributions will be excluded from the employee's gross pay before the NIC is calculated. It will be deducted after the NIC is calculated. This is again subject to the scheme you have selected.
Action: The various tasks associated with the data in each row will be displayed here. For example Save, Edit, Delete, etc.
Assign Scheme: To add a new pension scheme for the employee, select the required pension type from the drop down list and click on this button.

D2A. Auto Enrolment Pension Deduction

Auto Enrolment is an initiative by UK government to encourage saving for employees for their old age. The law was introduced in beginning of October 2012. Depending on the employee age and income, employers also make contributions to this pension scheme, adding to the contributions made by their employee’s.

Employers must automatically enroll all employees who are: (i) Aged between 22 and state pension age,(ii) Earning more than £10,000 a year and (iii) Working in the UK

Scheme Name / Group Name : The auto enrolment pension scheme/group name will be displayed here
Employee Pension Ref. : Employee's pension reference number will be displayed here.
Other Ref.: If any other reference number it will be displayed here.
Auto Enrolment (AE) Staging Date : The auto enrolment staging date will be displayed here.
Deferral Date: The auto enrolment deferral/postponement date will be displayed here.
Refund Opt Out Accepted Date : The date on which the opt out is accepted will be displayed here.
Effective Opt In Date : The date on which the employee's opt In is accepted will be displayed here.
Effective Cease Membership Date : The effective date from which the contribution will be stopped for the employee will be displayed here.
Action : The various tasks associated with the data in each row will be displayed here. For example Save, Edit, Delete, etc.

D3. Student Loan (Recurring as appropriate)

Student loans are part of the government's financial support package for the students in higher education in the United Kingdom. If student loan repayments should be deducted from the employee's pay, use this option in our service to enter the details.

Once entered, student loan deductions will be a recurring deduction item. Deductions will be made from the employees pay in any pay period run and updated between the student loan start and stop dates, so long as the employees pay is above the threshold for student loan deductions.

Although they are recurring, they will only run if the user ticks to select the employee concerned to do the payrun and then clicks on the Process Pay button. Student loan deductions will only be taken after the tick is made. The user needs to remember to tick the employee if anything needs to be done. Recurring items will not run until the employee concerned in the particular period is ticked to run the payrun.

Loan Ref. / Issued By: Enter here the loan reference or the loan issuer's name relevant to the chosen employee.
Plan Type: Enter here the Plan Type i.e Plan1, Plan2, Plan4 for the student loan deduction.
Start Date: Enter here the start date of the student loan deduction.

You should start making the student Loan Deductions only in any one of the following circumstances:

You receive a Start Notice, form SL1, from the HM Revenue & Customs. This will identify the employee and instruct you to start making deductions, using the Student Loan Tables. The notice will give a start date at least six weeks from the date of issue. You must begin making deductions on the first pay day after that start date. Do not begin making deductions before this date, even if it is easy for you to do so.
A new employee hands you a form P45 and there is a "Y" in the "Continue Student Loans Deduction?" box. (This means that a Start Notice has been issued to a previous employer / contractor.) You should begin to make deductions as soon as reasonably possible using the Student Loan Deduction Tables. If you receive the form P45 some time after an employee has started to work for you, you should not deduct any payments in arrears.

Stop Date: Enter here the stop date for the student loan deduction.

You should stop making the student Loan Deductions in the following circumstances.

You receive a Stop Notice, form SL2, from the HM Revenue & Customs telling you to stop making deductions. The notice will tell you when to stop making Student Loan deductions and it will allow at least six weeks to enable you to adjust your payroll. In exceptional circumstances, you may be asked by the HM Revenue & Customs to stop making deductions more quickly. The HMRC will make such a request either in writing or by phone, then confirm in writing.
If you are an Educational Institution or a Local Educational Authority employing teachers in England and Wales, the Student Loans Company may notify you to stop making deductions for teachers who have been accepted by the Repayment of Teachers Loans scheme. If you have started making deductions, please stop immediately, unless HMRC notifies you otherwise.

Rate: The rate at which the student loan will be deducted from the employee's pay will be displayed here.
Action: This field displays the various tasks associated with the data in each row. For example, Save, Edit, Delete, etc.

D3. Post Graduate Loan (Recurring as appropriate)

Post Graduate loans are part of the government's financial support package for the students in higher education in the United Kingdom. If post graduate loan repayments should be deducted from the employee's pay, use this option in our service to enter the details.

Once entered, post graduate loan deductions will be a recurring deduction item. Deductions will be made from the employees pay in any pay period run and updated between the post graduate loan start and stop dates, so long as the employees pay is above the threshold for post graduate loan deductions.

Although they are recurring, they will only run if the user ticks to select the employee concerned to do the payrun and then clicks on the Process Pay button. Post Graduate loan deductions will only be taken after the tick is made. The user needs to remember to tick the employee if anything needs to be done. Recurring items will not run until the employee concerned in the particular period is ticked to run the payrun.

Loan Ref. / Issued By: Enter here the loan reference or the loan issuer's name relevant to the chosen employee.
Start Date: Enter here the start date of the post graduate deduction.
You should start making the post graduate Loan Deductions only in any one of the following circumstances:
- You receive a Start Notice, form PGL1, from the HM Revenue & Customs. This will identify the employee and instruct you to start making deductions, using the post graduate Loan Tables. The notice will give a start date at least six weeks from the date of issue.You must begin making deductions on the first pay day after that start date. Do not begin making deductions before this date, even if it is easy for you to do so.
- A new employee hands you a form P45 and there is a "Y" in the "Continue post graduate Loans Deduction?" box. (This means that a Start Notice has been issued to a previous employer / contractor.) You should begin to make deductions as soon as reasonably possible using the Post Graduate Loan Deduction Tables. If you receive the form P45 some time after an employee has started to work for you, you should not deduct any payments in arrears.

Stop Date: Enter here the stop date of the post graduate deduction.
Rate: The rate at which the post graduate loan will be deducted from the employee's pay will be displayed here.
Action: This field displays the various tasks associated with the data in each row. For example, Save, Edit, Delete, etc.

D4. Attachment Order

An Attachment of Earnings Order is issued by a Court and will instruct an employer / contractor to deduct an outstanding debt from an employee via their wages. The employer / contractor is legally required to collect the stated amount. Deductions are always taken from the employee's attachable earnings. The employer / contractor must then pass the deductions on to the issuing court. An employer / contractor can deduct a £1 administration fee to cover its costs.

You can use this option to enter the details, If an Attachment to Earnings Order has been issued to the employee. Once entered, attachments will act as an automatically recurring item. Deductions will be made from the employees pay in any pay period run and updated after the Effective from date so long as the employees pay is above the protected earnings level for attachments.

Although the deduction is recurring it will only be made if the user ticks to select the employee concerned to do the payrun and then clicks on the Process Pay button. Attachments will only be taken after the tick is made. The user needs to remember to tick the employee if anything needs to be done. Recurring items will not run until the employee concerned in the particular period is ticked to run the payrun.

The rules governing the order in which AEOs can be deducted from an employee are complex. To make life easier for its users this service has incorporated these rules in its package. You simply enter the details of your employee's different AEOs and this service will ensure that they are deducted in the correct sequence in compliance with the above.

Order Type: This field displays the type of attachment order issued to the employee.
Order Issued By: This field displays the name of the authority, which issued the Attachment of Earnings order.
Order Ref.: If you have provided any reference to help you identify the specific order, it will be displayed here.
Normal Deduction Rate: This field displays the normal amount to be deducted for the attachment. Please note that in the case of Post 92 CCAEO and CTAEO, the attachment value is taken as a percentage.
Protected Earnings Rate: This field displays the minimum level of earnings that an employee must retain after a deduction is made. Where attachable earnings do not reach this figure, no deduction can be made.
Total Debt: This field displays the total sum of the attachment as specified in the court order.
Effective From Date: This field displays the start date for the attachment order.
Admin Charge: To cover their administration costs employers / contractors can deduct an administration charge of £1 per order from the employee (50p in Scotland). The fee is charged per pay period for each attachment and must be taken from employee's net pay. If you have entered the administration charges, it will be displayed here.
Action: The various tasks associated with the data in each row will be displayed here. For example Save, Edit, Delete, etc.
Add New Attachment: To add a new attachment order for the employee, click on this button.

D5. Other Deducting Items

In this section you can enter details of deduction items. Examples of common Other deduction Items includes Christmas Funds, Payroll Giving, Trade Union Subscription etc.

Most common deduction items have been pre-set for you by this service. To enter one simply select it from the drop down list.

These pre-set deduction items have been setup in compliance with statutory requirements specifying whether they are subject to PAYE tax, NIC and/or Pension contributions. After the YTD has been updated for this payrun the deduction item will be cleared and will not automatically reoccur.

If none of the pre-set items are suitable you can create your own by going to the Other Deduction Setup in the Chart of Setup section.

Deduction Name: From the drop down list select the other deduction item. Our service has provided you with some preset items. If none of the listed items meets your requirement, you can create your own deduction item by going to the Other Deduction Setup in the Chart of Setup section.
Amount: Enter here the amount that will be deducted from the employee's pay.
Occurrence: Occurrence refers to the frequency setting for the item i.e. how often the payment or deduction item will be applied to the employee's wages. If the occurrence is set as Recurring, the payment or deduction item will automatically be included in the employee's wages each and every time the employee's pay is calculated. If the occurrence is set as 'Non-Recurring', the payment or deduction item will not apply regularly to the employee's wages. The item will only apply on a one off basis in the next pay calculation you run for the employee and after that it will not automatically reappear.
Action: This field displays the various tasks associated with the data in each row. For example, Save, Edit, Delete, etc.

D6. Salary Sacrifice

Salary sacrifice is a contractual arrangement whereby an employee gives up the right to receive part of their cash remuneration, usually in return for their employer’s agreement to provide some form of non-cash benefit. This can lower the amount of tax and National Insurance contributions (NICs) you deduct and pay to HM Revenue & Customs (HMRC) on the employee's remuneration package because the figure on your payroll is the one which is taxable.

Salary Sacrifice Item : From the drop down list select the Salary Sacrifice Item. Our service has provided you with some preset items. If none of the listed items meets your requirement, you can create your own Salary Sacrifice Item by going to the Other Deduction Setup in the Chart of Setup section.
Amount : Enter here the amount that will be deducted from the employee's pay.
Occurrence : Occurrence refers to the frequency setting for the item i.e. how often the payment or deduction item will be applied to the employee's wages. If the occurrence is set as Recurring, the payment or deduction item will automatically be included in the employee's wages each and every time the employee's pay is calculated. If the occurrence is set as 'Non-Recurring', the payment or deduction item will not apply regularly to the employee's wages. The item will only apply on a one off basis in the next pay calculation you run for the employee and after that it will not automatically reappear.
Action : This field displays the various tasks associated with the data in each row. For example, Save, Edit, Delete, etc.

D7. Small Loan Repayment

Small Loan Repayment Item : From the drop down list select the Small Loan Repayment Item. Our service has provided you with some preset items. If none of the listed items meets your requirement, you can create your own Small Loan Repayment Item by going to the Other Deduction Setup in the Chart of Setup section.
Co. Loan Amount : Enter here the total loan amount.
Amount to Deduct (Current Period) : Enter here the amount that has to be deducted from the employee's pay.
Co. Loan Outstanding :The outstanding loan amount will be displayed here.
Occurrence : Occurrence refers to the frequency setting for the item i.e. how often the payment or deduction item will be applied to the employee's wages. If the occurrence is set as Recurring, the payment or deduction item will automatically be included in the employee's wages each and every time the employee's pay is calculated. If the occurrence is set as 'Non-Recurring', the payment or deduction item will not apply regularly to the employee's wages. The item will only apply on a one off basis in the next pay calculation you run for the employee and after that it will not automatically reappear.
Action : This field displays the various tasks associated with the data in each row. For example, Save, Edit, Delete, etc.

Associated Tasks

Save: To save the newly added details, click on this button. The new details will appear on the screen.
Edit: To modify any of the details, click on this button corresponding to that row. The row becomes editable.
Remove: To delete any of the details, click on this button corresponding to that row. A confirmation message appears. Click on OK to continue.
Update: To save the modified details, click on this button. The new details will appear on the screen. This button appears only when you click on the Edit button to modify any details.
Cancel: To cancel the Edit action, click on this button. This button appears only when you click on the Edit button to modify any details.
Back: If you have finished viewing, creating or modifying the details and wish to leave this screen, click on this button. You will be taken back to the payrun screen.