Payroll Profile

You specify here a number of general parameters concerning the type of payroll for this company, payment methods, pension and holiday pay arrangements, and (if paying by cash) the rules for the number of coins and notes used in a pay packet.

Type: (1/2/4-weekly, M-monthly)

A single payroll can only calculate pay for one period type. If you have (say) weekly and monthly paid employees, then you need to set up two payrolls. A payroll may be specified as weekly (1), fortnightly (2), four-weekly (4), or calendar monthly (M).

Start Year

Payroll Day

The Start Year is used to give the payroll year — e.g. 2013.The Payroll day should be set as the day of the end of the pay period you are paying for – i.e. if you pay on a weekly payroll if you pay for the seven days up to the Friday then enter ‘6’.

First Pay

Set as the date you first pay employees within the tax year – this is the date prompted as part of the year-end processes and is used to ensure that any tax band changes that may occur in Tax Week-7 (as did on a historical basis) are actioned in the correct payroll period.

Pay in Arrears: Number of Weeks

When using payroll the system defaults the date to pay up to (for weekly type payrolls) based on the day set above and the current period number. For example, if set to pay on Friday then the date for the payroll system in week-1 is the first Friday after April 6^th (the start of the tax year), in period 7 it would be the 7^thFriday after April 6^th.

If you pay on (say) a Thursday for the week up to the previous Friday then you would still set the pay day as 6 (the end day of the period you are paying for) but you might have to set the week in arrears parameter to 1 (or 2 / 3) for the date to default correctly.

Pay periods within the tax year

The number you enter here depends on your reply to the previous prompt and represents the number of pay periods in the current tax year for tax calculation purposes. For weekly, two- and four-weekly payrolls, tax is calculated on a weekly-paid basis, and there are 52 periods in the tax year. For a monthly payroll there are just 12 periods, so enter 12 here.

Extra payment in week 53/54

If running a weekly type payroll and there is 53^rd, 54^th or even 56^th week this year then set this option accordingly.

Current/last pay period paid

The pay period is automatically updated by the program as you complete each pay period. However, if you are setting up the payroll from scratch and starting from the beginning of the tax year, key 0 or 1 here.

If you are setting up a payroll part-way through the year, then enter the period number of the last period paid on your old system. You’ll have to enter the employees and their details (gross pay to date; NI and other payments and deductions to date) into the system before you can undertake the first payroll run.

Check for Minimum Wage by Age

Setting this option gives a pop-up allowing you to enter age bands and a minimum wage per hour for each band. This allows the system to validate during payroll input and whilst running the payroll that each employee exceeds the minimum wage.

Payment methods:

C - Coins/cash

Q - Cheques

B - Bank giro

A – Autobank

X – ETS / STS

Z - BACS

Six payment methods are supported by the Datafile Software payroll, and any one payroll may support all four. An individual employee can only be paid by one method, however. Set as appropriate for the payment types you want to support on this payroll. If enable BACS you will be prompted for the Service User Number.

Tax refund limit

There used to be a statutory limit to the amount of tax you may refund to an employee without further authorisation, which you enter here. Currently this limit is not applied so you should set this value to 0.If a limit is ever reintroduced then you can set this here.

Pension calculation (B,G,F,I)

This question concerns company pension schemes (see box below for more information about pensions).The payroll supports four types of company scheme:

B - Contributions are calculated as a percentage of basic pay

G - Contributions are calculated as a percentage of gross pay

F - Contributions are a fixed amount each period

I - Contribution are calculated as a percentage of an item in the employee file

Pension schemes often involve contributions being made by the company direct to a pensions company.If you are running a company pension scheme, then you should choose one of these methods by keying the appropriate letter. If you do not run a company pension scheme or it does not fall into any one these categories, leave this field blank.

If you choose the ‘I’ option, then you must also specify the data item number in the employee record which is used in the contribution calculation. You may use the <F4–Select> function key to view the employee file structure.

The Datafile Software payroll has comprehensive facilities for managing the many types of pension which can occur. UK pension schemes are subject to government regulations, and many schemes still exist which conformed to earlier rules but which are no longer available to new employees.

Broadly, pension schemes fall into four main categories, and an employee may take advantage of more than one scheme:

Company pension schemes

Personal pension schemes

Stakeholder pension schemes

Company Pension Schemes - Most company schemes involve a payment which may be made up of an amount contributed by the company and/or an amount contributed by the employee. Data items exist on the employee record to hold rates for calculating this amount (based on pay) or fixed contribution amounts. Employee voluntary company scheme contributions are tax-deductible for the employee, and the employer’s contribution is not considered part of the employee’s remuneration for tax purposes. 

Some company schemes are contracted out, which means that employees pay reduced NI contributions in exchange for (hopefully) better pensions from the company.

Personal Pension Schemes - An employee may decide to make regular contributions to a private pension scheme not specifically operated through the company.Usually such a pension can be set up on a contracted-out basis. These schemes usually operate directly between the employee and a pension company and so do not involve the payroll at all. 

Calculate only on earnings above lower limit

If you set the pension calculation to a value other than ‘F’ you are prompted with this option. There are some company pension schemes which are based only on earnings above the lowest band of earnings defined for NI purposes. If this applies to your company scheme set this option.

Pension Amount Net of Basic Rate Tax

Some company pension schemes deduct basic rate tax from the pension contribution. Set this option if required.

Secondary comp calculation

No longer applicable but historically for some pension schemes it may have been agreed that employees may pay the contracted-in NI amount rather than the contracted-out rate, the difference also being put into the pension scheme.

Pension deductible for tax calc

Employee pension contributions are usually deducted before tax is calculated, so you would normally set this option. If your company scheme does not qualify for tax relief in the payroll, then you must leave this blank.

Secondary comp calculation deductible for tax calc

No longer applicable but this option appears in a pop-up after the above if you are calculating secondary COMP contributions. This question concerns whether the extra contribution allowable under the COMP scheme (see above) can be set against tax.

Stakeholder Pensions

After confirming the requirement for company pension schemes a pop-up allows configuration options for the stakeholder pension scheme(s).

As with the company schemes, you can set Stakeholder Pensions to contribute based on a Basic% (B), a Gross% (G), a Fixed Amount (F) or a percentage based on the value in a specific data item on the employee file (I). Unlike the company schemes you can set to allow individual employees to contribute in different methods – one employee contributing based on a basic%, another on a fixed amount. Here you enter the letters BGFI to indicate which methods the employee can contribute on.

If you allow contributions based on a specific employee data item then you need to nominate this item here and then repeat the settings for any employer contributions.

Holiday pay calculation (B,Y,I) ?

The Datafile Software payroll can calculate holiday pay based either on the basic pay (B), or on the year-to-date average pay (Y), or else base it on the value of a data item within the employee file. Enter B, Y, or I as appropriate, or else leave blank if you do not want the program to calculate holiday pay.

If you choose I, then you are asked to specify the data item within the employee file. For example, if holiday pay were to be based on the average pay over the last eight weeks, then it happens that the program already maintains such an item on this basis specifically for statutory sick pay. You could then key the number for that item.

Holiday credit type (B,G,F,I)

The program can accumulate holiday credits (as a monetary amount) either based on a percentage of the basic pay (B), a percentage of the gross pay (G), as a fixed amount (F) or a percentage of the value held in a specified data item (I). Key B, G, F or I as appropriate or leave blank if this facility is not required.

If you choose I, then you are also asked to specify the particular data item within the employee file.As an example, to calculate holiday credits as a percentage of gross pay plus bonus, you need to define a calculated data item in the file which first adds the value of gross pay to the value of the switch used (see later) for bonus, and then multiply the result by a constant value which holds the percentage value to be used.

Any contribution is deducted from the employee’s gross pay.

Holiday Pay Excluded from NI

In some industries it is common for any holiday pay to be excluded from NI calculations. Consult your payroll advisor and set this option if it applies for you.

Statutory Payments in Gross Pay

Statutory Payments such as SMP and OSPP are by default reported within Datafile as Gross Additions (additions to pay before tax is calculated). Setting this option allows them to be included within Gross Pay itself.

Save files for each period

Set this option and the system saves copies of your payroll files as part of the initialisation procedure for the next period. These files have the same names as your current payroll files, except that the suffix is in the form Pnn, where nnis the period number in the range 01-56 for weekly-style payrolls, or 01-12 for monthly payrolls.

Save documents for desktop

You can elect to save copies of documents to disk for review and reprinting in just the same way as you can in the order processing systems via the ledger enquiry. Set this option to be shown a list of the document types that you can mark to save to disk. In this pop-up a parameter also asks if you wish to clear these documents as part of the year end.

No of days to retain docs

If you decide to save copy documents to disk, then you can say here how long to keep these copies. The value entered here is saved with the document and used in the Controls & Audit document clear down routine to decide whether a document should be removed.

Coinage Analysis (Cash Pay)

This facility only applies to employees who are paid by cash, and need not be completed if you have not set to allow this pay type. It is used to print a report showing the breakdown of all the notes and coins required to pay the employees in this payroll who are paid by cash.

The table is used to show the denomination of notes and coins which are to be used to make up cash pay packets, plus any denomination which must always be present.

The first six prompts refer to multiples of whole units of currency, whereas prompts seven to twelve describe coins which are less than a currency unit in value. In descending order key in the denominations of notes and coins to be used, pressing <Enter> after each. Leave any which are not required as zero.

Must include (1... 12)

You can specify up to three of the above denominations that must be included in the pay of each employee.Key any denominations (using the table entries above in the range from one to twelve) which must always be present in a pay packet. You may say there must always be a £5 note (provided pay exceeds £5, of course) and a £1 coin. This would ensure that a pay packet of £20 net would consist of one £10 note, one £5 notes and 5 £1 coins. A pay packet of £21 net, however, would consist of one £10 note, two £5 notes and one £1 coin.

Pay rounded to nearest (1… 12)

For employees paid in cash, net pay may be rounded, and the rounding is always upwards in the employee’s favour. Rounding is denoted by giving the denomination used us the rounding amount — usually the smallest value of coin. Net pay is reduced each period by any rounding amount brought forward from the previous period, and then rounded up for the current period. During the year, therefore, the employee is only in credit to a maximum value less than the rounding amount.