Types of Pay and Deduction
The different types of pay and deductions appear on different pages within the system. For repeating items, choose the employee's name from the options list and then pick one of the following tabs.
- Tax Details - for tax, NI and student loans.
- Pensions etc - for pension contributions.
- Statutory Pay - for sick pay and parental pay.
- Payslip Items - for everything else.
You can also add pay and deductions while you are running the pay run. On the Gross Pay Details page, click the word 'Add' on the right side of the page to add a special pay item.
Most recurring payments can be set on the Payslip Items tab. The main exceptions are sick pay and parental pay, which are on the Statutory Pay tab.
When you start a new pay run, the payments from the Payslip Items tab are copied to the Gross Pay Details page and you can change them for that pay run, if required.
Payments can be simple figures, such as Salary, or they can be the following special pay types.
|Special Pay Type||Subject to Tax/NI?||Examples|
|Extra Pay||Yes/Yes||Bonus, pay supplement|
|Hourly or unit rate||Yes/Yes||Hourly pay|
|Payment free of tax/NI||No/No||Expenses reimbursed|
|Employee's first pay*||Yes - special rules||Joiner paid for two months in one|
|Holiday pay in advance*||Yes - special rules||Money paid before the leave starts|
|Subject to Class 1A NI||Yes - special rules||Termination payment over £30,000|
*These are only available on the Gross Pay Details page
Tax, National Insurance and student loans are all set on the Tax Details tab. Pension deductions are covered by a separate guide. Court orders, Direct Earnings Attachments and Child Maintenance Orders are explained in their own overview.
The following deductions, which we call special pay items, can be added to the Payslip Items tab or to the Gross Pay Details page.
|Special Pay Type||Reduces Tax/NI?||Examples|
|Pay reduction||Yes/Yes||Salary sacrifice, Unpaid leave|
|Deduction from net pay||No/No||Repaying an advance|
The following special pay types, which don't affect the pay or deductions, can be added to the Gross Pay Details page. Their only affect is to set an indicator within the RTI submission sent to HMRC.
|Special Pay Type||When to Use|
|Employee is on strike||The pay has been reduced because the employee is on strike|