The Payroll Site

How do I use a salary sacrifice scheme, such as childcare vouchers?

These schemes work by reducing the employee's salary and giving vouchers or another benefit instead. Since the tax and NI is worked out on the reduced salary, there is less tax and NI to pay.

You can simply reduce the salary figure, or you can enter it as follows.

  1. On the right side of the Gross Pay Details screen, under 'Extra Options', click 'Add'.
  2. Change the special pay type to 'Pay reduction'.
  3. Enter an amount and a description.

If you want the pay reduction to appear automatically on each new pay run, you can enter it on the employee's Payslip Items tab.

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