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Issue dated 26 June 2105
Using Payroll – Overview and Initial Set Up
Payroll
The payroll function provides a fully featured and integrated payroll in the same online manner as the
accounting functions. All necessary payroll data is automatically recorded as and when the payroll is run.
All calculations and reports comply with Inland Revenue procedures.
RTI filing is integrated into payroll.
If required Payrolls may be scheduled forward in a single action for part of or a complete income tax year.
Payrolls will be automatically completed on scheduled dates and the related FPS submitted to HMRC.
Changes reflecting any new payroll regulations are automatically provided for new PAYE years.
The Inland Revenue publish many guides to administering PAYE and day-to-day payroll, we strongly
recommend that if you are unsure on any element of setting up and using a payroll you should read these
documents and / or discuss with your advisor.
Payroll .......................................................................................................................................................................................... 1
Activating the Payroll .............................................................................................................................................................. 2
General Settings Tab ......................................................................................................................................................... 2
Tax Office Tab ..................................................................................................................................................................... 3
RTI BACS Info Tab .............................................................................................................................................................. 4
Payroll Run Defaults Tab .................................................................................................................................................. 4
Government Gateway Credentials for online Filing ....................................................................................................... 5
Payroll Process in Summary ................................................................................................................................................. 6
The Payroll Menu ..................................................................................................................................................................... 6
Main Menu ............................................................................................................................................................................ 6
Reports .................................................................................................................................................................................. 6
Government Gateway ........................................................................................................................................................ 7
Manage Employees............................................................................................................................................................ 7
Set Employee ....................................................................................................................................................................... 8
Manage Payroll .................................................................................................................................................................... 8
Configure Payroll ..................................................................................................................................................................... 8
Global Pay Elements .......................................................................................................................................................... 8
Pension Schemes ............................................................................................................................................................... 11
Setting up Initial details of an Employee ........................................................................................................................... 11
Where Next? ............................................................................................................................................................................ 12
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Activating the Payroll
Before any payroll facilities are available the feature needs to be activated, and in first instance, the
relevant PAYE year set; subsequently when a PAYE year is closed in the system the new year is
automatically rolled forward. (Note that PAYE years run from the 6th April to the 5th April following, if
necessary confirm with your advisor which year you are starting in).
Payroll is activated initially by ticking the Use Payroll? Box in the Optional Features tab of Profile Entity Name à Profile à Optional Features NOTE: Messages and warnings may appear requesting the user to complete the configuration.
A payroll menu is now visible in the top-level menu items. The
next stage is to configure Payroll to operate as required by the
business. This is done in the Configure payroll screen.
Payroll à Configure Payroll à Business PAYE Settings A five tabbed payroll configuration screen is presented.
General Settings Tab
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Select the PAYE Year from the dropdown. To initiate a compliance reminder display, enter dates in the
next two fields, as they are appropriate.
• Date RTI FPS Last Filed
• Date P11D Last Filed
If the business has an ECON number (Employers Contracted-Out Number) then enter it in the box.
If the Small Employer Relief case will apply tick the box.
Refer to http://www.gov.uk/recover-statutory-payments for information on current rates and thresholds
applying to Small Employer Relief. As at 2015/2016 businesses paying less than £45,000 p.a. in National
Insurance contributions were eligible for Small Employer Relief.
If the business is defined as entitled to Small Employer Relief the system will calculate the SMP/SPP/SAP
that may be recovered (100%) and the NIC compensation that may be claimed by the employer (3.0%).
Note that the calculation is applied as part of the payroll run so if your Small Employer status changes midyear you should take professional advice. If the user defines their business as not entitled to Small
Employer Relief Liberty Accounts will calculate the SMP/SPP/SAP that may be recovered (92%) using the
standard rate.
Tax Office Tab
The PAYE Reference consists of the three-digit tax office number followed by the employer reference
supplied by the tax office. (e.g. 123 / A12345). It can normally be found on a P6/P9 notice of coding or an
annual/budget letter
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This field is mandatory and for RTI purposes must be accurate, as must be the next field the Accounts Office Reference. This is in the format 999XX00099999 and can be found on a 30BC Payment booklet or
P30B Paying Electronically
Finally Tax Office Name and Address may be added if required.
RTI BACS Info Tab
This tab will only be populated if the payroll user is making payments via their own BACS Service User
Number (SUN).
Refunds
This tab is used to enter the details of a bank account into which any PAYE refunds due will be paid by
HMRC.
Payroll Run Defaults Tab
The defaults tab allows a user to set default behaviours for payrolls runs. Defaults may be amended
during an actual payroll run.
The defaults that may be set are
• Select which Payroll Admin Group, such as Monthly or Weekly pay Group
• To automatically email payslips to employees when an FPS is successfully filed
• For RTI filing, automatically file the FPS on the payroll run date.
• Posting the employee net pay directly to the cash book as individual amounts or as
• An Aggregated total.
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Submit to confirm the update to the configuration.
Government Gateway Credentials for online Filing
To submit RTI filings Government gateway credentials are required. These are stored on a user-by-user
basis. Navigate to the Government Gateway Credentials screen.
Entity Name à Government Gateway Credentials
In the screen that is presented enter the relevant details.
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Select the Default Sender Classification, either employer or as tax agent. This will be used if the automatic
filing of FPS submissions is set.
Note: - for staff members of accounting partners credential defaults may be set at the partner level. If this
is done partner staff do not need to complete this screen.
Payroll Process in Summary
•
If necessary ensure at least one bank account is available, see Opening a Bank Account user guide.
•
Enter initial details of employees
•
Define the types of remuneration (Monthly salary, Weekly pay, bonuses etc.) that will be paid via
the payroll, known as Global Pay Elements and at the same time the relevant account in the chart of
accounts.
•
Enter PAYE and National Insurance details of employees
•
Associate appropriate Pay Elements to each Employee.
•
Enter any prior pay details by employee if setting up for the first time or a new employee.
•
Run payroll
•
File an FPS and an EPS if necessary
•
Make all payments, to employees as well as to the Inland Revenue and any pension organisations
involved.
•
File all printouts and received notices
A convenient checklist may be printed out each time you prepare and run a payroll. This checklist is
available via Help - user guides.
The Payroll Menu
The payroll menu options are divided into six key areas.
Main Menu
The top two items access the usual items required to set up and run payrolls on a
regular basis; Includes amending pay and deduction items and then processing
single or multiple payrolls.
Reports
Provides reporting facilities for payslips, payroll summaries as well as the Inland
Revenue forms P11, P14, P32, P45 and P60.
Employee data report displays all the standing data associated with each employee.
Payroll analysis report provides the details of the payroll runs for each employee during the tax year. This
report may be exported in XLS and CSV format.
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Details of generated lists for net pay are available as well as a
report identifying the accounting entries into the nominal
ledger.
An export file with payment extracts that can be used for
BACS/online banking is available from the Payment Listing
report.
Government Gateway
Access and manage RTI filing processes as well as the online filing
facilities for year-end PAYE filing. P11D online filing, if this feature is
being used, is also launched from this menu.
Manage Employees
The group of menu items under manage employees provides for adding the
details of new employees. Together with information on any prior pay (Previous
employment or previous payroll system), details of any employee loans or court
order instructions.
Once an employee has been set up, clicking the Manage Employees menu item
accesses a list of all employees. From that list employees can be made active on
a payroll and PAYE details added and maintained. See more below.
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Set Employee
Click Set for a particular employee to enter employee details; PAYE tax information, pay, deductions and
pension information.
A Quick Pay/Deductions facility is available to amend pay and/or deduction data for multiple employees
rather than one at a time. See Setting up employee’s payroll data user guide for more information.
Manage Payroll
Controls payroll runs. Facilities exist to view the history of
payroll batch runs as well as rollback a particular payroll run for
an employee or backup and restore payrolls.
Close PAYE year closes the current PAYE year and rolls the
system into a new PAYE year. Bulk Tax Code Update allows for
bulk adjustment to all tax code in the payroll. This is usually
used for a new tax year when HMRC issue general instructions
to amend all tax codes.
Configure Payroll
Provides for basic payroll configuration data, and accesses the
setup of global level details for pay elements and pension
schemes.
The Business PAYE Settings, described above, will not normally
be amended once set up initially.
Global Pay Elements
Global Pay Elements are set up and maintained from the menu item under Configure Payroll. A pay element is simply an item of remuneration or deduction which is to be included in the calculation of
net pay. Where relevant, pay elements will appear as line items on an individual payslip.
Common elements are:
• Monthly Pay
• Weekly Basic
• Weekly Overtime
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• Holiday Pay
• Bonuses
• Trades Union subscriptions
• Sports & Social Club subscriptions
• Benefit in Kind taxed via Payroll
• Expense reimbursed via the Payroll (Added automatically if this feature is used)
Pay elements are usually set up once, but occasional maintenance may be necessary
Pay elements are set up via the Configure Payroll menu.
Payroll à Configure Payroll à Global Pay Elements • Click on Add Item to input data.
• Check the Active box for the pay element to be active. Deactivate a pay element if you do not want it to
appear in pay dropdown lists.
• Enter a unique name and description in the Element Name field
• Select the appropriate Element Type from the dropdown list.
The most common will be either:
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o
Pay
- a remuneration element
o
Benefit in Kind
PAYE
- tick if the element represents the value of a benefit taxed under
o
Deduction
- an element of deduction from pay
However the following statutory payments may be used:
o
SSP
- Statutory Sick Pay
o
SMP
- Statutory Maternity Pay
o
SPP
- Statutory Paternity Pay
o
ShPP/ASPP
- Shared Paternity Pay
o
SAP
- Statutory Adoption Pay
• Select the Payment Pattern for the pay element. A Recurring Fixed Amount will appear with the same
value in each relevant pay period, until amended. A Recurring Variable Amount will appear with a
blank value in each relevant pay period; enter the value on each occasion. An Ad Hoc Amount will
appear only the once and will clear once a payroll run has been finalised.
• Click the Impacts PAYE Gross? Check box if the pay element is to be subjected to PAYE tax deduction.
Please take professional advice if you are unsure whether a pay element is subject to PAYE.
• Click the Impacts NIC Gross? Check box if the pay element is to be subjected to National Insurance
Charge. Please take professional advice if you are unsure whether a pay element is subject to
National Insurance.
• Click the Impacts Pensionable Gross? Check box if the pay element is to be included for pension
scheme calculation purposes. Please take professional advice if you are unsure whether a pay
element is pensionable.
• From the dropdown select an Account relevant to this pay element. The account selected will be the
one that is used to record the impact of the pay element on the entity.
For most element types of Pay, the account will be an Expense Account (such as Payroll Cost Administration), to reflect the cost of the employee to the entity.
It is likely that an element type of Deduction will mean the monies deducted from the employee are to
be paid over to a third party (Trades Union, Social club etc). In this case the account selected is likely
to be a Current Liability account as the money is owed to the third party and will be paid over in the
future.
Element type of SSP/SMP/SPP/ShPP/ASPP/SAP (the statutory payments) will normally require the
account to be the matching statutory payments Expense Account.
• Save Item confirms the entry. By clicking on Add Item on each occasion the user can enter further
Elements. Undo Item cancels the current line item data.
• Submit confirms and stores the pay elements.
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Pension Schemes
Any pension schemes that are available to employees have to set up so that any contributions to the
schemes from either the employee or employer are calculated and recorded.
Please refer to the Pensions Schemes user guide for more information.
We recommend you take appropriate professional advice to fully understand the nature of the pension
scheme and the obligations with respect to National Insurance Charges.
Setting up Initial details of an Employee
From the Lists menu, either click Officers/Employees to show a list of existing employees and then select
Add New Or select Add Officer/Employee.
Or from the Payroll menu, click Add Employee
A form with several tabs is displayed.
In the Personal Details tab enter the relevant details; note many are mandatory. For payroll purposes a
date of birth is required and will be reported on RTI filings. The correct age appropriate NI category will be
will be applied when the Date of Birth has been verified.
Note a warning will be displayed before a payroll is run if a Date of Birth has not been verified when an
age related adjustment may be necesary.
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The Passport Number field is used in connection with RTI payroll filing (See separate Payroll/RTI user
guides). An employee’s passport number is incuded where checks have been carried out by the employer
to satisfy themselves the person has the right to work in the UK.
Employement dates are entered in the Employment Details tab.
If the System payroll features are not being used then select Previously Notified. If the payroll is being
used and there has been a previous FPS for this employee in this entity (say from another payroll system)
also select Previously Notified.
However if the payroll is being used and if it will be the first time the employee will be reported on a FPS
return for this entity then tick Required. Supplmentary employee declarations will appear. Select the one that applies. Note you are strongly
advised to ensure the declaration is accurate by consulting your employee.
Enter dates of when the Employment Started and when (If relevant) Employment Ended for the employee.
Address details, some of which are mandatory, are entered in the Contact Details tab. The E-mail Address
is used when a user selects a document (Payslip or End of Year Certificate (P60)) to be e-mailed directly
from within the system to this employee/officer. You are therefore are advised to ensure that it is
appropriate and accurate.
Finally In the Bank Details tab the Sort Code and Bank Account details can be entered. The information can
form the basis of a general extract file that can be used for online banking or creating a BACS file.
Where Next?
The following payroll user guides provide further detail information on the payroll facilities.
•
Payroll Check List
•
Setting up employee’s payroll data
•
Running a payroll
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