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CM0510
Level 1

salary sacrifice pension

Hi, we'll be making pension contributions for the first time this month and I'm trying to finalise everything. I'm the only employee enrolled onto the pension. We'd like to run the pension as salary sacrifice. 

 

QB help chat has suggested reducing my salary through a regular deduction, but I can't find a pre-tax deduction option (we're using QB Online). Running it as a post-tax deduction would surely defeat the point of salary sacrifice. 

 

What is the best way to set this up?

7 REPLIES 7
Ashleigh1
QuickBooks Team

salary sacrifice pension

Hello CM0510, 

 

Welcome to the Community page, 

 

Can we ask which payroll it is you use in your account is it standard payroll or advanced payroll?

CM0510
Level 1

salary sacrifice pension

Standard

BettyJaneB
QuickBooks Team

salary sacrifice pension

Hello there, @CM0510.

 

Allow me to provide some insights about creating a pre-tax deduction for Standard Payroll in QuickBooks Online.

 

At this time, having the pre-tax deduction category is only available to the Advanced type of payroll subscription. For Standard Payroll, you can only select After-tax deduction, which is taken from your employees’ pay after taxes, and the Repayment, which is a deduction that is not taxed.

 

In your case, I recommend using the Repayment so the pension will be deducted without taxes.

 

To do that:

  1. Go to your profile.
  2. Click on Actions at the top.
  3. Choose Deductions.
  4. Press on the + icon at the top and select Repayment.
  5. Select Add next to Repayment.
  6. To customise this deduction, enter a Name for the loan.
  7. From Rate type, select whether this repayment is going to be deducted from the employee’s payroll payment as an Amount or a Percent.
  8. If you select Amount, enter a Default amount to deduct. If you select Percent, enter a Default percent to deduct from the employee’s pay.
  9. Save your changes, then close the window.

To give you more details about this process, please see this link: Add or customise deductions in QuickBooks Standard Online Payroll.

 

I'm also adding here an article that you can check out for more insights about the things that you can do in Standard Payroll: QuickBooks Online Standard Payroll Hub.

 

Please know you can get back to me anytime you have additional questions and concerns. The Community ensures your success.

CM0510
Level 1

salary sacrifice pension

Hi, I've tried this out. The amount of NI and PAYE going out is exactly the same as last month even with the 'repayment' deduction. How is this possible when the deduction is made pre-tax? Surely I would then be paying less NI/PAYE?

GeorgiaC
QuickBooks Team

salary sacrifice pension

Hi CM0510,

 

Thanks for getting back to us on this thread. The taxes are calculated before the deductions are made on the payroll, so if the gross pay you have entered is the same as the previous month then it would be correct that the NI and PAYE is the same. Please get back to us below if you have any Q's. 

CM0510
Level 1

salary sacrifice pension

So repayment is not pre-tax? Does that mean there is no way to do a pre-tax deduction?

JasroV
QuickBooks Team

salary sacrifice pension

Thanks for the clarification, @CM0510.

 

Let me share additional information about repayment. Repayment is a deduction that is not taxed. This is primarily used for loans. An example of this is if your employee borrows your money or takes an advance in their salary.

 

To learn more about deductions in your QuickBooks Online (QBO) account, you can refer to this great resource: Add or customise deductions in QuickBooks Standard Online Payroll

 

Additionally, there isn't a way to do a pre-tax deduction in your QBO standard payroll. However, you can consider upgrading your payroll subscription to Advanced. There, you'll have the option to do a pre-tax deduction to your employee.

 

I'm adding this article that you can use for future reference. This can guide you through the process of setting up deductions in your QBO Advanced Payroll.

 

Tag me in if you have other questions. I'm always here to back you up anytime. Take care and always stay healthy.

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