Create and manage payments

To ensure you pay your employees correctly, you need to set up payments. There are a number of payment types available for you to choose from. You can set up the payments you need to use, edit them or delete them in Payroll.

You can’t delete payments in Payroll. If you don’t want to use a payment in the current pay run, you can remove it when you’re processing an employee’s pay details. To do this, simply click the delete button next to the relevant payment.

Payment types available

Payroll supports a number of different payment types, organised into categories.

When you create a new payment, you base it on one of these payment types. This determines whether it is subject to tax and NI.

Payment Category Payment Type Subject to PAYE? Subject to NI
Hourly Payments Basic Hours Yes Yes
  Overtime Hours Yes Yes
  Other Hourly Pay Yes Yes
Salary Salary Yes Yes
  Bonus Yes Yes
  Commission Yes Yes
  Other Salary Payment Yes Yes
  Taxable Non-NIable Yes No
Holiday Pay Advance Holiday Pay Yes Yes
  Hourly holiday pay Yes Yes
  Salary holiday pay Yes Yes
Expenses Business Expenses No No
  Private Expenses Yes Yes
  Benefits in Kind Not available N/A
Redundancy Redundancy (Tax, NIC ER) Yes Employers NIC only
You should use Taxable Non-NIable payment types for redundancy payments that exceed £30,000 or to process the final pay for an employee who has died.

You should only use the Redundancy payment for the amount of a redundancy payment which exceeds £30,000, for the first £30,000 use Business Expenses.

To create a new payment

  1. Select Settings, then select Payment & Deduction Settings.
  2. Select Payments, then select Create New Payment.
  3. Enter the details of the new payment, then select Save.

You can return to this screen to edit your details by selecting the deduction from the list, then select Edit.

The following options are available:

Item Description
Payment Category

The employee may receive several different types of payment in a pay run. These payments are organised into categories.

* Hourly Payments
* Salary
* Holiday Pay
* Expenses

* Redundancy

Payment Type When you create a new payment, you must specify the category it belongs to, and the payment type the new payment should be based on.
Name The name of the payment. This appears on payslips. You can accept the default name or enter your own.
Description Text to explain the purpose of the payment. You can accept the default description or enter your own.
Include in Calculation of

The following options are available:

* Pension Earnings – To include the payment when calculating pensionable earnings, select this checkbox.
* Qualifying Earnings – To include the payment when calculating qualifying earnings, select this checkbox.
* Salary Sacrifice - To include the payment when calculating the Salary Sacrifice pension contribution, select this checkbox.
This option is only available for a payment that is subject to PAYE and National Insurance.

The payment now appears in the payments list in the Payments tab. If you created the payment while processing pay, the new payment is applied to the employee’s pay.