This screen is used to create and maintain details about payroll elements that are used in payroll.
A payroll element is simply an item of remuneration or deduction which is to be included in the calculation of net pay. Where relevant, pay elements will appear as line items on an individual payslip. Common elements are:
- Monthly Pay
- Weekly Basic
- Weekly Overtime
- Holiday Pay
- Statutory Pay - Maternity, Sick, Paternity, Adoption
- Trades Union Subscriptions
- Sports & Social Club Subscriptions
- Payrolled Benefits such as company car and fuel
Pay elements are usually set up once, but occasional maintenance may be necessary
The ADD ITEM button starts the process of adding a new payroll element. The SAVE ITEM button saves that line item in the screen. Clicking ADD ITEM button on each occasion allows user to enter further items. UNDO ITEM cancels the current item.
To store the payroll element for use in payroll click on the SUBMIT button.
If the switch is moved to inactive the pay element will be considered inactive. and will not appear in payroll element drop-down lists.
Select an appropriate element type. The most common will be either:
- Pay - a remuneration element
- Deduction - an element of deduction from pay
- Payrolled Benefits - used were certain P11D benefits are being processed via the payroll
- Expenses - can be used where lump sum expenses are being paid via a payroll
The following statutory payments may also apply:
- SSP - Statutory Sick Pay
- SMP - Statutory Maternity Pay
- OSPP - Ordinary Statutory Paternity Pay
- ASPP - Additional Statutory Paternity Pay
- SAP - Statutory Adoption Pay
More information on dealing with statutory payments is available from Payroll - Dealing with statutory maternity, adoption, paternity and sickness payments
More information on payrolling benefits is available from Payroll - Payrolling Benefits
Note also that an Expenses Claimed payroll element exists by default and is used where expense and mileage claims documents are reimbursed via a payroll.
Select the payment pattern for the pay element.
A Recurring Fixed Amount will appear with the same value in each relevant pay period, until amended. The value is set at the individual employee level.
A Recurring Variable Amount will appear with a blank value in each relevant pay period; enter the value on each occasion. The value is set at the individual employee level.
An Ad Hoc Amount will appear only the once and will clear once a payroll run has been finalised.
Impacts PAYE Gross
For payments tick this item if the pay element is to be subjected to PAYE tax deduction. Most pay elements will be subject to PAYE and the box will need to ticked.
For deductions tick this item if the deduction should reduce the amount of pay to be subjected to PAYE tax deduction. This would be unusual so if unsure please check with a professional advisor.
Please note Auto-Enrolment earnings assessment will include those items tagged as in PAYE Gross.
Impacts NIC Gross
For payments check this item if the pay element is to be subjected to National Insurance Charge (NIC). Most pay elements will be subject to NIC and the box will need to ticked.
For deductions check this item if the deduction should reduce the amount of pay to be subjected to National Insurance Charge (NIC).
Impacts Pensionable Gross
For payments check this item if the pay element should be included for pension scheme calculation purposes.
For deductions check this item if the deduction should reduce the amount of pay considered for pension scheme calculation purposes.
It is often the case that not all payments would be included for pension scheme purposes an example could be overtime. You are strongly recommended to seek advice from your professional advisor if you are in anyway unsure.
From the dropdown select an account relevant to this pay element. The account selected will be the one which is used to record the impact of the pay element on the entity. This is a mandatory field.
For most element types of Pay, the account will be an Expense Account (such as Payroll Cost - Administration), to reflect the cost of the employee to the entity.
It is likely that an element type of Deduction will mean the monies deducted from the employee are to be paid over to a third party (Trades Union, Social club etc). In this case the account selected is likely to be a Current Liability account as the money is owed to the third party and will be paid over in the future.
Element type of SSP/SMP/SPP/SAP (the statutory payments) will normally require the account to be the matching statutory payments Expense Account.