cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Have a question about HMRC's VAT portal closure on November 1st? - Ask it here!
ErinWG
Level 1

Pension Salary Sacrifice Scheme Advanced Payroll

Setting up a pension salary sacrifice scheme on Advanced payroll, we will be using it for the first time this month. I'm trying to set up the contribution rate - there are boxes for Eee % contribution, Eer % Contribution, Salary Sacrifice %, and NI % - I'm not sure what I'm supposed to so with these, they are not included in the instructions. I expected the system to look at an employees notional salary and then deduct a % contribution. Can anyone advise how to set the scheme up and what calculations the system makes?

7 REPLIES 7
GeorgiaC
QuickBooks Team

Pension Salary Sacrifice Scheme Advanced Payroll

Thanks for joining us here on the Community, ErinWG

 

How much you pay and what counts as earnings depend on the pension scheme, have you already set up a workplace pension scheme with a pension provider? :)

ErinWG
Level 1

Pension Salary Sacrifice Scheme Advanced Payroll

Yes, we have a pension provider and I have set the basic details up within Advanced payroll. I need to know how system operates the salary sacrifice scheme, what/ where are the different boxes pointing to and what calculations are being performed. Does the system hold a notional salary anywhere?

Ashleigh1
QuickBooks Team

Pension Salary Sacrifice Scheme Advanced Payroll

Hello ErinWG, If you have a look at this link here it tell you all about pensions in advanced payroll. You can have a look at this article as well that is also tells you about pensions in advanced payroll as well here

Chris Wright 27
Level 1

Pension Salary Sacrifice Scheme Advanced Payroll

Hi there - I have the same question, which I don't think has been addressed. The automated sync is clever, but it doesn't answer the question asked.

 

What concerns me is that salary sacrifice may not be applied correctly if we enter an employee contribution percentage. As you will know, salary sacrifice involves deducting pension contributions before tax, which saves the employee a little at the time of making the pension contribution. The pension provider treats these as employer contributions, so no tax is reclaimed (as none has been deducted).

 

So - if we show in Quickbooks only employer pension contributions, I don't believe anything will be deducted from the employee's salary, and tax will be charged on the full salary. If we show employee pension deduction, will this be deducted from the gross salary before or after tax?

 

 

Chris Wright 27
Level 1

Pension Salary Sacrifice Scheme Advanced Payroll

I see in Quickbooks there is provision for "net pay arrangement" in pension settings. I'm hoping that having selected this option, employee pension contributions are deducted before tax, as a salary sacrifice.

 

Quickbooks very cleverly allows a CSV file for pensions to be exported after payroll has been processed. I note that the export maintains separate employee and employer contributions, which doesn't translate properly for the pension provider, who expects all contributions to be from the employer, if salary sacrifice is being applied. This signals to them that no tax should be reclaimed.

Ashleigh1
QuickBooks Team

Pension Salary Sacrifice Scheme Advanced Payroll

Hello Chris Wright 27, thanks for joining this thread,  so here is some more information for you. So pensions always deducted from the gross wage amount.  For the net pay arrangement means the full percentage is taken, so for example if it is set at 5%- it will take the 5%, its nothing to do with the net pay. Whereas relief at source- if its entered at 5%, it will take 4% on relief at source as its 4/5th of the percentage entered.

Chris Wright 27
Level 1

Pension Salary Sacrifice Scheme Advanced Payroll

Hmmm - not sure I agree here - per Quickbooks own FAQs:

 

Net pay arrangement – pension contribution is deducted before taxes and NICs. The pension contribution is taken from gross pay (before taxes). This reduces the employees taxable pay by the amount of the employee contribution. This method allows for immediate tax relief and is best for employees who are higher or additional tax payers.

 

Reference FAQs at the bottom of this sheet - 

https://quickbooks.intuit.com/learn-support/en-uk/help-article/retirement-benefits/workplace-pension...

 

Need to get in touch?

Contact us