What is a Net to Gross payment?
A Net to Gross payment is for when you want to specify a net
amount of pay the employee is to receive. The software
automatically works out the gross pay needed to pay the required
net value and enters the appropriate amount as a payment.
A Net to Gross can only ever be a payment. There should be only
one Net to Gross payment in your list. If you do have more than
one, it will be only the first one that works.
I am trying to add a new payment/deduction but keep getting an
error 9. Why?
This error only occurs if you have previously, at any time in
the past, deleted a payment/deduction. To get round this problem,
add the new payment/deduction using the wizard or contact support to ask
for a new CD.
Can you explain the Apply Before Tax and NI / After Tax and NI
categories?
Apply before tax and NI
calculation
The amount will be subject to both tax and NI if it is a
payment. The amount will be exempt from both tax and NI if it is a
deduction.
Apply after tax and NI
calculation
The amount will be exempt from both tax and NI if it is a
payment. The amount will be subject to both tax and NI if it is a
deduction.
Apply after tax but before NI
calculation
The amount will be exempt from tax but subject to NI if it is a
payment. The amount will subject to tax but exempt from NI if it is
a deduction.
Apply after NI but before tax
calculation
The amount will be subject to tax but exempt from NI if it is a
payment. The amount will be exempt from tax but subject to NI if it
is a deduction.
What is a notional payment/deduction?
A notional payment allows you to increase the employee's NIable
or taxable gross without giving an addition to pay.
After tax but before NI:
increases an employee's NIable gross pay. After calculating NI on
the increased gross pay an after-tax deduction is automatically
made for the same amount. In this way an employee can pay extra NI
without receiving extra pay.
After NI but before tax:
this does the same as above except that the code affects taxable
gross pay.
How do I set up a salary sacrifice?
These are our recommendations for setting up a salary sacrifice
in EARNIE. We would advise that you seek clarification on how HMRC
want you to deal with your scheme before going ahead.
There are two ways to set up a salary sacrifice on EARNIE:
Reduce the amount of the employee's normal salary. If required,
include the amount sacrificed on the payslip by setting up a
"display only" payment/deduction.
Leave the employee's salary as it is. Deduct the sacrificed amount
as a before tax and NI deduction.
The method you choose will depend on what is in your employees'
contracts - you should only use the second option when an
employee's contract contains details of the salary sacrifice
scheme. If you do not have anything in the contract about the
salary sacrifice you should reduce the employee's salary.
The main difference between the two methods relates to any pay
elements based on the employee's salary (e.g. pension). Using the
first method, any such elements will be based on the reduced salary
(so, for example, the pension contributions will be smaller). Using
the second method, such pay elements can be based on the original
salary, so there would be no change in the amount of the
payments.
Statutory payments (SPP, SMP etc.) will be the same in either
case, because these are based on the Niable gross, which will be
reduced correctly using either method.
Method 1:
Salaried Employees
Amend the salary on the employee's details screen, on the Salary
tab.
Hourly-Paid Employees
The hourly rate is reduced, based on the standard weekly pay and
the amount to be sacrificed. For example, if an employee earns £7
per hour and normally works a 40 hour week, the weekly pay would be
£7 x 40 = £280. If the salary sacrifice amount is £20 per week, the
weekly pay must be reduced by that amount: £280-£20 = £260 per
week. So the new amount per hour will be £260/40 = £6.50.
To alter the hourly rate, just amend the £/hour figure on the
rates tab.
Please note:
The hourly rate cannot be reduced below the National
Minimum Rate.
If you want to include the sacrificed amount on the payslip,
create a display item only payment/deduction although there is no
requirement for this to show on the payslip.
Method 2:
Set up a before tax and NI deduction to deduct the sacrificed
amount. This applies whether the employee is salaried or hourly
paid.
How do I pay a net bonus?
Go to Company/Alter Payments/Deductions and use the wizard to
configure a net
to gross payment. You can call this payment anything you like, such
as 'Christmas Bonus'. If you are comfortable not using the wizard
configure a new payment with
a category of 'Net to Gross'.
Run the payroll as normal, without the bonus. Click preview and
take a note of the net pay.
Return to the normal payroll screen and click on the next
available free line under the Pay/Ded section. Choose the new net
to gross payment from the drop down
list. Enter the total of the original net pay and the bonus into
the 'Amount' field.
When you preview the payroll now you will see the grossed up value
of the bonus listed under payments.
How do I pay a Net to Gross payment?
Use the wizard to configure a net to gross payment. Preview the
payroll without
the bonus. Take a note of the net pay. Bring through the payment
into the payroll screen. Add the original net pay to the bonus
payment. Rerun the payroll putting the new amount alongside the net
to gross item.
If I say yes to clearing down all my rates &
payment/deductions at year end, will I have to set them all back up
again?
No, clearing these down during the year end restart will only
zero the running totals for these in the to-date column of the
employees record. It will not clear out the actual values for
them.
Can EARNIE manage Stakeholder Pensions?
The Stakeholder Pension is a new type of Pension Scheme. By
October 2001 every company must have in place either a pension
scheme that complies to new legislation, or, a Stakeholder Pension.
A Stakeholder Pension is an after Tax and
NI deduction which can either be a percentage or a fixed value.
In EARNIE, the Payment/Deduction Wizard includes options for the
employee's and employer's contributions.
I am setting up my company payments & deductions. What is a
Display Item Only?
Any amount entered against a Display Item Only does nothing. It
is a figure you can use to print on payslips and reports but it
does not affect the payroll in any way.
The best example of a Display Item is Employer's Pension. You
may want to see the calculated amount but it does not affect the
employee's pay.
Why is the payment/deduction I have set up at company level not
coming through to the payroll?
If the payment/deduction was set up after the payroll was run
you need to click on the revert button in the payroll run to bring
it through. Remember, this will set the payroll back to before any
changes were made.
If the payment/deduction is still not coming through check what
the Clear to-date Totals option is set as in the company set up. If
it is 'When total is Zero' there needs to be an amount in the
to-date column in the employee's payment/deduction details. If the
payment/deduction is not a reducing balance use another category
for Clear to-date Totals.