Additions and deductions are used for adding in positive and negative pay elements other than the basic Pay.
Additions and deductions are set up under the company then applied to each employee through a couple of different methods.
Setting up Additions and Deductions
A new Addition can be set up by selecting ‘Company’ > ‘Additions/Deductions’ and click ‘Add New’.
Then enter in an Addition/Deduction name, for example ‘Bonus’ or ‘Loan’. Then set any options for the Addition/Deduction by ticking the relevant boxes to apply Tax/NI etc. and click ‘Save’. Further details for this process are found below:
The description allows you to give the addition a name, for example Bonus, Overtime or Loan. The name will appear on all reports and payslips.
If the original addition description is lengthy then you can give it a short description. You can also use these when importing via spreadsheet using Payroll Bureau/Specialist.
Different pay elements can be added depending on the type of addition/deduction. Using the ‘Subject to’ tick boxes means you can apply different attributes to the additions/deductions:
(Tax) – If the addition is subject to tax.
(NI) – If the addition is subject to national insurance.
(PEN) – If the addition amount is to be included in any pensionable earnings calculation.
(Gross) – If you would like to run a net to gross calculation within a gross to net calculation.
(HOL) – if the addition is used for holiday pay.
(HOL Cred) – if the addition to added into holiday credits and accrual.
(CIS Mat) – If you run payroll for subcontractors then you can create an addition for CIS materials. (Tax and NIC will not be applied on an addition marked for CIS Materials).
(VAR) – If the addition has a variable/changing rate.
(Att Earn) – if the addition amount is to be included in figures used to calculate an attachment of earnings order (AEO’s).
(QE) – This tick-box is used to mark qualifying earnings for Auto Enrolment pensions.
Rate and Rate factor
Rates can be filled out to specify an hourly/daily rate and the rate factor can be used to specify the factor at which the rate is multiplied.
Deleting a Deduction
If you wish to remove a permanent deduction the you will need to first remove it from ‘Employee Maintenance‘ > ‘Deductions‘. If the deduction is temporary and has only been included when you ‘Open & Pay‘ then you can remove it from the same screen. To remove from either screen:
- Highlight the deduction you would like to remove.
- Click ‘Delete‘ and the deduction will disappear.
If you are trying to add in an addition/deduction and there isn’t one appearing in the drop down box then it’s either because you haven’t created any additions/deductions under ‘Company’ > ‘Company Maintenance’ or you haven’t clicked ‘Create Addition’ or ‘Create Deduction’.
Applying Additions and Deductions
There are two different ways you can add an addition/deduction to your payroll. Which option you choose depends on if the addition/deduction is permanent or temporary. Details of setting up both can be found below:
If you would like to do a temporary ‘addition/deduction‘ you can do this by going to the open and pay screen click ‘Change‘ and then select either ‘Additions‘ or ‘Deductions‘ you can then select your ‘addition/deduction‘ by clicking ‘add new‘ and then selecting your ‘addition/deduction‘.
You can add in addition/deduction to an employee so that it will apply to every pay period until you remove/stop it. This can be done by going to employee maintenance and selecting either the ‘Additions’ or ‘Deduction’ tab.
Decrementing Balance Deduction
To pay a deduction over a number of periods the total amount payable can be entered in the ‘Starting Amount‘ field.
- Enter the date when the deductions will begin.
- Enter the amount to be deducted each pay period in the Amount field.
- This amount will then be deducted each pay period until the deduction is paid.
Additions and Deductions in Open and Pay
If you have created an addition/deduction in employee maintenance then the calculation will be automatically updated with the change. If however you have created an addition in company maintenance and want to apply it to an employee you can do this from the change icon in ‘Open and Pay‘.
Pressing ‘Change‘ in the top left will display the screen below. It is from here that you can select the addition you require to be added to the calculation.
- Select ‘Add New…‘
- Choose the addition/deduction that you want to apply from the drop down box
- You will be able to see the ‘Rate‘ and ‘Rate Factor‘ that you created in ‘Company Maintenance‘ these are not editable values.
- You need to enter a final value into ‘Amount/Hours‘
- In the example below we want to pay a fixed amount of £150 so we have left the rate and rate factor at 1.00
- Once you are happy with the information that you have entered click ‘Save..‘ and ‘Close‘ (the button for ‘Create Addition‘ will take you to the ‘Company’ > ‘Additions/Deductions’ window where you can create an addition for the first time)
You should see your new addition appearing in the calculation screen in the box labelled ‘Additions‘