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How to create redundancy payments in QuickBooks Desktop

A redundancy payment is tax and national insurance (NI) up to the value of £30,000.

To process the payment, you need to create a payroll item under Addition type and have it under Other Payroll items on the Employment Payment Detail.

Steps on how to create the redundancy payment

  1. Go to Employees then Payroll Setup.
  2. Select Add or Edit Payroll item.
  3. Select Payroll item then New.
  4. Payroll item type is Addition. Select Next.
  5. Enter the name of the addition as Redundancy. Select Next.
  6. Payroll item counts as qualified earnings for assessment. Select Next.
  7. Payroll item is pensionable earnings. Confirm with your pension provider if the amount is part of the pensionable earnings.
  8. Select the expense account so you can track the amount.
  9. Select the tax tracking type then select Next
  10. Under Taxes, the payment is tax and NI free up to £30,000.
  11. Calculate based on quantity.
  12. Select Finish.

Note: If you need any more information on redundancy payments, see Making staff redundant .

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