Payroll - Running a Payroll
This guide explains how to run a payroll.
Running a payroll is made up of six basic stages: -
- Data Preparation and Entry
- Setting the payroll run parameters
- Calculating the payroll
- Reviewing and confirming the payroll
- Processing RTI filings to HMRC
- Make net pay payments to employees and pay deductions over to HMRC
- Email or distribute payslips to employees
Data preparation and Entry
If you have not done so already please refer to Manage Employees and to the Payroll - Overview guides for entering the relevant data. Pay data may be entered on an individual member basis or by using Quick Pay/Deductions for all payroll members.
Set any organisation payroll cost analysis to Branches/Funds and/or Activities default. Click the Payroll - Costing link for more information on this topic
Payroll - Quick Pay/Deductions
The Quick Pay/Deductions screen presents a list of all active payroll employees with those payroll elements that have previously been set up for them and the last values. Simply amend as required and click SUBMIT to store. A quick link to Payrun Processing is also available by clicking on the PAYRUNS button. See more on Payrun Processing below.
If new payroll elements need to added for an employee this will need to be done via manage employees. For further information click on : Employee Pay & Deductions
Personnel - Manage Employees - Pay and Deductions (for the relevant employee)
Setting the payroll run parameters
The Payroll Admin Group and the PAYE Payment Date identify a particular payroll. So to prepare a payroll run these two parameters must be set. Payroll Admin Groups are most commonly weekly or monthly, however 2 weekly or 4 weekly may exist. Because of issues of tax-free pay for income tax and earnings thresholds for National Insurance the Payroll Admin Group is important and employees need to be allocated to a particular pay period. Hence a payroll with a particular Payroll Admin Group will determine the employees who will be included in the run. The deduction of PAYE tax is usually cumulative in nature, and consequently the free pay allowance is spread over the year depending on the pay interval, so therefore the date of the payroll determines how much of the free pay can be used for the year to date.
The payroll run is set using Payrun Processing accessed via the Payroll menu.
Payroll - Payrun Processing
A Payroll Run Settings screen is displayed. If default processing parameters have been set in Configure Payroll then these will populate some of the fields. Note the default settings may be amended in this screen.
Select the PAYE payment date for your payroll run. This is the date that is used to define which PAYE period the payment falls in for the purposes of PAYE calculations. This date is reported to HMRC as the payment date unless you provide a separate cash payment date.
Note only one payroll run is allowed per PAYE period (weekly, Monthly etc) for any employee. A warning message is displayed if a second is attempted.
An optional cash payment date may be provided where it is different from the PAYE payment date. This can occur where a weekly payroll has a PAYE payment date on a Friday, but the actual payment is made in the following week after the hours worked info is available to allow the payroll to be calculated. Also where the pay period is say for a calendar month, ending on the last day of a month but where the salary payment is made a few days before say the 28th of the month. If this date is completed, it is given to HMRC as the Payment Date in the FPS and is the date by which the FPS must be filed.
Select the Payroll Admin Group from the drop down box (any default value may be amended)
By default 'All' employees is set. Select a particular employee from the dropdown list to run a payroll for that individual employee. This may be the case if it has been necessary to rollback payrolls for this employee to make a correction and are now recalculating.
AutoPost Pay Cheques/BACS Payments, if ticked, will record the net payments to the selected bank account. If a single figure is preferred as opposed to an entry for each employee then tick the Aggregate BACS Payments? box. If cheques are being used to pay employee net pay than set the Starting Cheque Number.
There may be circumstances where the creation of an FPS needs to be suppressed, perhaps because payrolls have been rolled back for an individual employee. Tick the Suppress FPS box. The law demands that an FPS is filed on or before a PAYE Payment Date (or Cash Payment Date) so users are strongly advised to take appropriate professional advice before using this function.
To automatically email payslips to employees on successful filing of an FPS make sure the Payslips box is ticked. Note this option may be set by default on the Payroll Run Defaults tab of the PAYE Settings screen ; un-tick to cancel.
The Calculate Forward box is used to set up batches of payrolls to be run automatically. See the section below for more guidance.
Click SUBMIT to prepare the payroll run. The screen redraws displaying the run that has been created.
To complete an Auto Enrolment (AE) assessment using the payrun data to determine the pay reference period assessment date, click the AE ASSESSMENT button. A list of employees in the payroll is displayed together with the AE assessment information. This information is stored when the payroll is closed and/or FPS filed.
Where there are outstanding expenses and mileage claims marked to be paid via the payroll they may now be imported to the payroll run by clicking the IMPORT EXPENSES button. A screen is presented that allows the user to select appropriate claims.
More information on entering expense and mileage claims is available from:
Tick ADD TO PAY adjacent to those items to be paid in this payroll run and click SUBMIT. On the Payroll run settings screen CALCULATE to prepare the payroll. The payroll run settings screen redraws
If Auto filing of RTI on payment date is enabled the FPS will be submitted on the PAYE Payment Date (or Cash Payment Date) and the payroll finalised and closed. If the PAYE Payment Date (or Cash Payment Date) is in the past the FPS will be filed overnight.
The user may, however, force the FPS submission immediately by clicking File RTI FPS button. In this case the FPS filing screen is presented for the user to start the submission (see below for more information). Filing the FPS closes a payroll and updates nominal ledger accounts.
Reviewing the payroll run
As required, from the payroll reports menu, view on the screen or print out
- Payslips
- Payroll run summary
- Deductions Working Sheet (P11)
Payroll - Reports - Payslips or Payroll Run Summary or P11
The details of the accounting entries that have been made can be viewed via the payroll reports menu.
Payroll Reports Nominal Ledger Transfer
Emailing Payslips
A convenient method of distributing payslips to employees is via the system-emailing feature. To use this feature, in the first instance, make sure email addresses are accurately entered for each employee on their employee details record. The user may also choose whether the pay slip is emailed as an attachment or a link; the default being as a link.
Payroll - Manage Employees - Set Employee - Contact Details tab
If the feature is used Payslips may be automatically emailed to employees on successful filing of the related FPS to HMRC.
The Configure Payroll screen allows a user to set the default position preferred, either automatically or when the payroll run is created.
Payroll - Configure Payroll - PAYE Settings - Payroll Run Defaults tab
Tick the Payslips box to set automatic emailing. The user still has the option to switch emailing off at the time of a pay run creation.
During the creation of a particular pay run the Payslips box will be automatically ticked if the default above is set; otherwise the user may choose to automatically email payslips or not by ticking or un-ticking the box.
Creating an Extract file for BACS/online banking purposes
From the Payroll Reports menu, go to Payment Listing.
Payroll - Reports - Payment Listing
Define the Parameters by select the PAYE Year and the Payroll Admin Group involved. Specify the PAYE Period required and confirm the output requirements
- Choose the Output Type, as a PDF or to Excel or as a BACS file
- If a BACS is selected then File Format is required from the dropdown list
- For any BACS file an Originating Account is needed and well as the Payment Date
Click GENERATE to create the output.
Note that the download file is intended to form the basis of a file for transfer to BACS or an online banking payment service. It will only include items where the current payment method on the employee is BACS/Electronic transfer.
Payroll Payments Generic Format
The following fields are generated in the payroll payments download:
- Payment Date
- Originator Bank Sort Code
- Originator Bank Account Number
- Originator Bank Account Name
- Originator Reference - Payroll Reference
- Employee Bank Sort Code
- Employee Bank Account Number
- Employee Bank Account Name
- Reference - Business Name
- Amount (pounds.pence)
Payroll Payments BACS Style Data Format
The following fields are generated in the payroll payments download and should me mapped as required into your BACS software:
- Employee Bank Sort Code
- Employee Bank Account Number
- Originator Bank Sort Code
- Originator Bank Account Number
- Amount in pence
- Originator Bank Account Name
- Originator Reference - the employee payroll reference
- Employee Bank Account Name
- Payment Date in BACS processing date format (spaces with 2 digit year then day of year)
- Payment Date in standard UK date format ("DD/MM/YYYY")
- Reference - Originator business name
Payroll Payments Natwest Bankline Standard Payment Format
The records are as per the Natwest Bankline spec and include:
- Originator Reference - Payroll Reference
- Originator Bank Sort Code+Originator Bank Account Number
- Amount (pounds.pence)
- Payment Date (ddmmyyyy)
- Employee Bank Sort Code
- Employee Bank Account Number
- Employee Bank Account Name
- Reference - Business Name
Payroll Payments Natwest Bankline Bulk List Template Format
The records are as per the Natwest Bankline spec and include an initial debit record with details of the originating account followed by the credit items with the following data:
- Originator Reference - Payroll Reference
- Employee Bank Sort Code
- Employee Bank Account Number
- Employee Bank Account Name
- Reference - Business Name
Payroll Payments Natwest Bankline Bulk List Payment Format
The records are as per the Natwest Bankline spec and include an initial debit record with details of the originating account followed by the credit items with the following data:
- Originator Reference - Payroll Reference
- Amount (pounds.pence)
- Employee Bank Sort Code
- Employee Bank Account Number
- Employee Bank Account Name
- Reference - Business Name
Processing Payrolls Forward
The Calculate Forward box on the Payroll Run Settings may be used to set up batches of payrolls to be run automatically. Use this feature where the basic payroll and employee data do not change. On the payroll run settings screen:-
Payroll - Payrun Processing
Set the next payroll date and the details, then tick the Calculate Forward box, an Until date box appears, enter the date of the last payroll period required. Click SUBMIT and the screen redraw display the payrolls.
Each payroll is open and has been calculated. If Auto filing of RTI on payment date is enabled the FPS will be submitted on each Date Paid and the payroll finalised, closed and nominal ledger accounts updated.
If auto filing is not set the user can submit each FPS as required. Prior to filing; each payroll can import expenses, be amended and recalculated and even deleted. For other payroll runs (say for weekly pay) click ADD PAYRUN for a new payroll Run Settings screen.
Deleting a payroll run
The history of Payroll runs can be viewed from batch history.
Payroll - Manage Payroll - Payroll Batch History
The screen displays all payroll runs within the date range and their status. The latest payroll run for any particular Payroll Admin Group may be deleted and subsequent runs in turn as far back as is necessary. If an FPS has been successfully filed for a deleted payroll run the situation on HMRC records is not changed by the deletion of a payroll. Therefore HMRC records and those shown on the system will be inconsistent. This will be corrected when new payroll runs are prepared to bring the system figures up to date and a new FPS is filled (for a date after the last one filled), this FPS will correct the year to date figures on HMRC records.
It is recommended that appropriate professional advice is taken where the user is unsure as to what to do.
If the batch run is a closed payroll run DELETE sets the status to Open; transfers to the nominal ledger are deleted and the payroll may be amended and then calculated again. Deleting an open payroll run removes the payroll altogether.