Setting up Pay Run Inclusions

Pay Run Inclusions comprise of additional pay items that are set up against an employee and then automatically included in the pay run. The specific items include:

• Deductions
• Expenses
• HMRC adjustments
• Tax Adjustments

These can be set up to include a specific start date and end date (otherwise it can repeat indefinitely). To set up a Pay Run Inclusion for an employee, choose the relevant employee from the employee list and then select 'Pay Run Inclusions' from the left side menu.  

From there, refer to the following instructions below depending on what item you want to set up.

Setting up a recurring Pension Adjustment:

1. Click on  HMRC Adjustment > Add.
2. Select the appropriate contribution type from the drop down list.
3. Enter the adjustment amount to be applied per pay run. It can be a fixed amount, a percentage of gross earnings, percentage of pensionable earnings, percentage of taxable earnings or percentage of NIable Earnings.
4. Enter any notes if you want the employee to see them on their pay slip.
5. Enter the date this inclusion is to commence.
6. Choose when this inclusion should cease (a specific end date, never or once a particular amount has been reached).
7. Click on 'Save'.

An example of a HMRC Adjustment is as follows:

Setting up a recurring Deduction:

1. Go to the employee record for the employee that you want to create the recurring deduction for and under the 'Pay Run Settings' section click 'Pay Run Inclusions'.
2. Click on 'Add' on the right side of 'Deductions' and complete the following details:
• Select the appropriate deduction category from the drop down list.
• Enter the deduction amount to be applied per pay run. It can be a 'Fixed amount', a 'Percentage of Gross' a 'Percentage of NET' or 'Varied based on earnings amount'.
• You should set the priority if there is more than one inclusion.
• Student loans need to be taken into account and the correct setting should be selected here.
• Select whether the deduction should be paid manually or bank account. 
• Select if the preserved earnings should be used from the drop down menu.
• Apply a note if you would like this deduction to have a note attached on the employee's pay slip.
• Please state when you want this inclusion to start and when it should expire.
• Click save.

 Setting up Preserved Earnings

Preserved earnings is defined as the minimum net earnings an employee MUST be paid before a deduction amount can be applied in the pay run. For example, an employee could have a garnishee order but part of the order includes that the employee's net pay cannot be reduced to less than £300 per week as a result of a court order. To set this up of example, you would:

(a) Preserved earnings: select 'Once a minimum net earnings limit has been reached';

(b) Preserved earnings amount: enter £300;

(c) If the amount is not reached: here you can choose to have none or only part of the deduction amount processed in the pay run;

(d) Carry forward unpaid deduction amounts: here you can choose whether or not you want any unpaid deduction amounts to be carried over to following pay runs. For example, say an employee’s recurring deduction amount was fixed at £100 per pay run but only £50 was deducted in the pay run. If you choose to carry forward the unpaid deduction amount, the unpaid £50 will be carried over and a total of £150 will be deducted in the following pay run. If you choose not to carry it over, the unpaid £50 deduction amount will be disregarded and in the following pay run only the recurring £100 will be deducted.

(e) Carry forward unused preserved earnings: here you can choose whether or not you want any preserved earnings that are paid below the preserved earnings carried forward. For example, an employee has preserved earnings set at £300. In one pay run the employee is only paid £200 in net earnings. If this setting is ticked, the difference of £100 will be carried over so that the preserved earnings for the next pay run will be £400. 

Setting up a recurring Expense:

An example scenario of when to use this would be when an agreement has been reached with an employee that the company will reimburse mobile phone expenses and will not form part of their gross wage.

To add a new recurring employee expense, click the 'Add' button on the right of Expenses and complete the following details: 

1. Select the appropriate expense category from the drop down list.
2. Select the location the expense should be costed against. This will default to the employee's default location however you can change this to another location that the employee is attached to.
3. Assign a tax code to expense categories to cater for sales taxes that may be applied to expense claims i.e., VAT. If you are attached to a cloud accounting system such as QuickBooks, Xero or Saasu, you’ll be able to select the tax code from your accounting system to be pre-populated when your employees submit an expense claim.
4. Enter the expense reimbursement amount to be applied per pay run.
5. Enter any notes if you want the employee to see them on their pay slip.
6. Enter the date this inclusion is to commence.
7. Choose when this inclusion should cease (a specific end date, never or once a particular amount has been reached).
8. Click on 'Save'.

Additional Notes

To edit an existing Pay Run Inclusion, simply click on the name and the settings will appear. Make the relevant changes and click on 'Save'.

 To delete an existing Pay Run Inclusion, hover your mouse over the inclusion so that the 'x' appears. Click on this icon and then click on 'OK'.

4. A note that has been added to a pay run inclusion will no longer appear on the employee's pay slip once the inclusion has expired. The YTD amount will still appear on the pay slip but any associated notes won't. The notes WILL still appear on any of the previous pay slips where the pay run inclusion was still active, as long as the 'show line notes' option on the Payroll settings > Pay slips page has been ticked. This applies to all pay run inclusions with the exception of HMRC adjustments.

5. In order to set up recurring employee deductions and expenses, the categories initially need to be created in Payroll Settings. Click on the relevant Inclusions below to find out more information on how to set these up:

• Deductions
• Expenses

If you have any questions or feedback, please let us know via support@yourpayroll.co.uk