Payroll - Salary Sacrifice

Salary sacrifice deductions are gross pay deductions that give the employee relief on tax and NI contributions. Commonly these are used for childcare voucher schemes, cycle to work schemes, give as you earn etc.

Note that for childcare vouchers the current HMRC scheme is closed to new entrants from 4 October 2018. Tax-free Childcare may be available to your employee instead. You are advised to consult your professional advisor.

Dealing with Salary Sacrifice

In the first instance set up a pay element as a deduction.

Payroll - Configure Payroll - Payroll Elements

Click ADD ITEM and give the element a suitable name as it will appear on the payslip; for example "Salary Sacrifice - Childcare Vouchers"

Select the element type as Deduction and an appropriate payment pattern. Make sure both the Impacts PAYE Gross? and Impacts NIC Gross? boxes are ticked. Select an appropriate account to post to. Note it will be posted as a reduction in payroll costs to offset any purchases associated with the sacrifice scheme.

Click SAVE ITEM and if no other elements are to be entered at this time click SUBMIT to store.

It is now necessary to apply the deduction to any relevant employees.

Navigate to manage employees

Payroll - Manage Employees - Action Box click Pay & Deductions

On the employee Pay and Deductions screen click ADD ITEM and select the salary sacrifice pay element and enter the quantity and rate to compute the amount of deduction.

Click SAVE ITEM and if no other elements are to be entered at this time click SUBMIT to store.

Now run your payroll as normal, the details of the salary sacrifice will show on the employees payslips.


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