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Managing net payments

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Do you often need to pay a net payment to an employee and have to work out the tax and national insurance (NI) due on this? You can do this as part of your normal payroll using net payments.

For example, if you want to pay a bonus of an extra £100 net, you can use the Net Payments option to specify the amount you want to pay and your software calculates the gross. Net payments are designed to be used with other payments to make up a final salary.

Want to pay a full salary as a net amount? Use the net to gross option. Find out more.

To create a net payment

1. Company > Pay Elements > Net Payments > New.

Tip: To sort the net payments listed in an ascending or descending order, click the appropriate column.

2. To change the details of an existing net payment > select the relevant payment > Edit.

Note: The Reference number is assigned for you and can't be changed.

3. Enter or amend the details as required.

   Payment details

   Use this table to help you complete the net payment details.

   Option name	Description
   Status	From the drop-down list, choose the status for your payment as follows: Factor - To create a factored payment. See Maintaining factored payments. Fixed - To change the Hours/No and Rate in the employee's record. You can also change the hours when you pay your employees using the Enter Payments option. Global - To only make changes to the payment at a company level. Variable - To change the Hours/No and Rate in the employee's record and when you pay your employees using the Enter Payments option.
   Description	Enter a description for the payment.
   Base Payment	If creating a factored payment, choose the payment you want to base your factored payment on.
   Default Hours/No	Either set a default number of hours or leave it as zero.
   Rate	Available if Status is set to Fixed, Global or Variable. You can enter a default rate or leave it as zero. If you leave it as zero, you have to enter the rate when you pay the employee using the Enter Payments option.
   Default Multiplier	If you are creating a factored payment, enter a default multiplier or leave it as zero. Then choose how you want the payment to calculate. This can either be as an amount multiplied by the base payment rate or a percentage of base payment rate. For example, 1.5 times or 10 percent of the base payment rate.
   Payment Adjusted For Employee's Tax	To create a payment that is only net of tax, select this option.
   Payment Adjusted For Employee's Tax and NI	To create a payment that is net of tax and NI, select this option.
   PAYE	If the payment isn't subject to tax, clear this check box. The payment is added to the employee's pay after tax has been deducted.
   National Insurance	If the payment isn't subject to NI contributions, clear this check box. The payment is added to the employee's pay after NI has been deducted.
   Pension (Main)	If you don't want to take the main pension contribution from this payment, clear this check box. The payment is added to the employee's pay after the pension contribution has been deducted.
   Pension (AVC)	If you don't want to take additional voluntary pensions contributions (AVC) from this payment, clear this check box. The payment is added to the employee's pay after the AVC has been deducted.
   Qualifying Earnings	If you don't want this payment to form part of qualifying earnings for automatic enrolment, clear this check box. Qualifying earnings are used to determine employee eligibility as part of the pension calculation under automatic enrolment, and are defined as: Salary Wages Commission Bonuses Overtime All statutory payments. Sage 50 Payroll automatically treats statutory payments as qualifying earnings. You need to determine if a payment you're making is one of the components of pay that make up qualifying earnings. You may also include additional types of payment to the employee to be considered as qualifying earnings. Any alternative payment types over and above those listed here can be considered as qualifying earnings at your discretion.
   Community Charge	If you don't want your payment to be subject to Community Charge Attachment of Earnings Orders, clear this check box. The payment is added to the employee's pay after the community charge has been deducted.
   Council Tax	If you don't want your payment to be subject to Council Tax Attachment of Earnings Orders, clear this check box. The payment is added to the employee's pay after the council tax has been deducted.
   Other Attachments	If you don't want your payment to be subject to other Attachment of Earnings Orders, clear this check box. The payment is added to the employee's pay after any other Attachment of Earnings Orders have been deducted.
   Include for Holiday Accrual	To include this payment when calculating the employee's holiday fund, select this check box.
   Auto Advance	To include the value of the payment when advancing pay to employees, select this check box.
   Include for Weekly Averages	To exclude this payment type from the 12 or 13 week averages calculation used for holiday pay, clear this check box. Find out more.
   Include in Timesheet Entry	To exclude this payment from the time sheet entry process, clear the check box. Want to know more about Timesheet Entry? See Quick entry of payments and deductions.

4. Click OK.

You now need to assign the payments to the employee record. See Assigning payments to employees.

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