Payments and Deduction Table

Datafile Software

Payments and Deduction Table

In addition to standard deductions and payments (for example: statutory sick pay, holiday pay, National Insurance contributions, tax, company pension), you may define further payments, deductions and repayments which are to be used within the payroll

In Professional systems you can define up to 6 further "switches”, for Diamond and Premier Systems you can define up to 20. If Premier and using Payroll Plus you can define up to 80 switches.

These payments and deductions are referred to as "switches” because you can decide for each employee whether to switch each option on or not. For most systems they are given letters of the alphabet for ease of reference, but you can change the database names to reflect their true use. If using Payroll Plus then the switches are numbered.

Switches may be used for such things as union dues, hospital fund, travel expenses and so on. You may want to change the data item names from "C-SW-A”, "Y-SW-A”, "C-SW-B”, "Y-SW-B” (holding current and year-to-date values for switches A and B) to "C-UNION”, "Y-UNION”, "C-HOSPITAL” and "Y-HOSPITAL”, and so on.

Letters A–R (1-18) are used for the standard switches, whereas S or T (19 or 20) are used for ones which involve a calculation, such as (say) a productivity payment based on a factor and the number of hours worked. Switches 21-80 in Payroll Plus are standard switches.

For a switch to be useable the employee file must have a current period field to hold the values for that switch. In the example table shown above, only switches A–F are configured in the payroll; switches G–R are not set up as evidenced by the brackets around the letter.

For each of the standard switches which you wish to use, enter the following details:

Description

Type in a description for the switch of up to 15 characters including spaces. The text which you type in here is used as the prompt on the screen for input in the user program.

Payment / Deduction / Repayment

Specify the type of switch here: either that it is an addition to pay (P), a deduction from pay (D) or a repayment (R) — for example on a loan or court order.

If the employee file includes a year-to-date data item for any switch then for deductions and payments the program automatically accumulates the year-to-date amount each time the payroll is run. For a repayment, you may input the balance still owing from the user program, and the program re-calculates the balance remaining to be paid each time the payroll is run.

Taxable

Set if the amount is to be added to (or deducted from) the gross pay before calculating tax. If you leave this blank then the amount is added to (or deducted from) the net pay only after tax is calculated. In the example screen shown above, bonuses and commission are both taxable, so these are set. A voluntary pension contribution is paid from gross pay, so this is also set.

Employee expenses may be paid through the payroll, but they do not attract tax. Any repayment of company loans is also made from net pay, so in both cases this flag would be left blank.

NHI

NI rules are similar, but not the same as the taxation rules. Voluntary pension contributions are not deducted before NI is calculated, so in the above example this is left blank. All the others are the same as for taxation, as it happens.

Pension

This question relates to any company pension scheme(s) which apply to this payroll. Set if the amount is to be added to (or deducted from) pay for the purposes of calculating company pension contributions, otherwise leave blank.

Fixed

Set if the switch is for a fixed amount, or leave blank if it varies each period. If the switch is specified as fixed, the amount entered on the employee record is displayed at run-time and can be accepted or overwritten (and if it is overwritten, then the new value is written back to the employee record for display next period). If the amount is not fixed, then the value is cleared each period and you must enter it anew.

Advance

This relates to the treatment when advancing holiday pay. If the switch if fixed then the amount paid/deducted is also to be advanced when holiday periods are advanced if you set this option – i.e. on a weekly payroll if a switch usually deducts £5 per week, then if you pay an extra week’s holiday £10 would be deducted.

AVC

Set whether the deduction is specifically a pension contribution from the employee (Full Payment Submissions to the HMRC require the total pension contributions for the year)

Benefit

A benefit in kind is where an addition is made to the employee pay for tax purposes but has no additional effect on net pay (other than the extra tax!). Within Datafile such a benefit is defined over two switches – a payment to increase taxable / ni’able pay and a deduction to remove the extra value from the employee’s net pay. Set both the payment and deduction in these circumstances.

Switches S–T

Switches S and T (19 and 20) may be used when a payment or deduction is to be calculated based on a formula as described below. They can only apply to hourly-paid employees.

First, enter the details as for switches A to R above — note that the "Fixed” and "Advance” prompts do not apply to these switches. You must then enter the details of the calculation from which their values derive.The elements used in the formula are hours, rate of pay and a factor.

Hours

The number of hours to be used in the calculation may be determined either as the normal basic hours held in the employee file (N), or the actual number of hours worked excludingovertime hours (B), or the total number of hours worked including overtime hours (T).Key N, B or T <Enter> as appropriate.

Rate

The rate is the multiplier to be applied to the hourly rate of pay contained on the employee record. It may be entered with up to four places of decimals. For example to use the standard hourly rate, enter 1.0000; to use time-and-a-half, enter 1.5000.

Factor

Here you may specify a factor which is then applied to the hours x rate specified above. Again you may use up to four places of decimals.If you leave this prompt at zero, the program uses a factor held in the employee record instead (see "Switch S Factor"and "Switch T Factor” data items in the Database Profiles). This provides the facility to use a different percentage for each employee. Note that a factor of 5% is entered as 0.0500.

For example: to ask the program to calculate a productivity bonus which, for all employees, is 5% of the total number of hours worked (including overtime), based on their normal hourly rate, specify the prompts as follows:

HOURS: T

RATE: 1.0000

FACTOR: 0.0500

If a percentage factor is held on each employee record, and the productivity payment is to be based on hours actually worked (excluding overtime) at the rate of time and half, specify:

HOURS: B

RATE: 1.5000

FACTOR: 0.0000

The final screen of the Payment / Deductions table relate to Attachment of Earnings Orders or AEO deductions.

Item Numbers (1-4)

When setting an AEO deduction against the employee it is usually based on a basic%, gross% or fixed amount. You may also define a specific item on the employee file to calculate the deduction against and here you may reference up to four items.

Switch Number for Admin Charge – as an employer you may make a admin charge to the employee for processing a AEO deduction. Set here the switch against which administration charges are to be accumulated.

Maximum Total Admin Charge for AEO Payments – set here the maximum amount that can be deducted for administration of AEO deductions.