How the Statutory Deductions Calculation Card Components Work Together

A Statutory Deductions calculation card comprises National Insurance and Pay As You Earn (PAYE) calculation components, and associations. Together, these components define how to calculate, process, and report taxes and national insurance deductions.

Use the Calculation Cards task under Personal Information in the Payroll work area to view the employee's calculation card and update it as needed.

The number of components and the types of component details may vary by employee. For example:

• If an employee has multiple assignments and uses different national insurance (NI) categories for each assignment, you can create multiple NI components, one for each assignment.

• If an employee has multiple assignments with different tax codes, you can create a PAYE component for each one.

Note: Each PAYE and NI component must be associated with one or more assignments. There may be more than one PAYE card component, and more than one NI Category. Ensure each assignment (and therefore all its earnings) are associated to both (one PAYE component, and one NI category) as at an one effective date.

Tax Reporting Unit Association and Association Details

A Statutory Deductions calculation card must be associated with a tax reporting unit (TRU). This association enables the payroll process to apply rules and rates defined for the TRU when calculating deductions. It also controls the aggregation of deductions for tax reporting.

Pay As You Earn

The Pay As You earn section is mainly for tax calculation and a record is automatically created when the card is created. Use it to enter tax calculation values, such as tax code and tax basis. Each PAYE component can have only one Pay As You Earn component detail record.

You can create additional component details as required to provide previous employment details, new starter declarations, and pensioner notifications. Here are the sections under Pay As You Earn:

• Basic Info: Includes HMRC Payroll ID, Tax Code, Tax Basis, and additional details such as authority, previous employment details, reason to withhold tax

• Reporting Data: Includes details such as number of periods covered, date of leaving as reported to HMRC, and late PAYE reporting reason.

• P45: Includes P45 action and date when P45 was issued manually, if applicable.

• Filing status: Includes various filing details such as date of leaving as reported to HMRC, P45 filing date, and previous HMRC Payroll ID.

• Assignments: Includes details of which assignments are associated with this PAYE component with the assignment number.

National Insurance

The automatic calculation card creation process creates this component along with the card. However, you may have edit the component to modify the default NI category and pension basis. The NI categories and pension bases you can select are restricted by statutory rules.

NI Details and Additional Info

The application also automatically creates the NI details record. Use it to enter NI processing information for special circumstances. For example:

• If an employee is a Director who receives annual payments in addition to regular salary, you define how to handle those payments here.

• If you're making multiple or irregular payments for an employee, you can define how to calculate NI on the special payments.

When loading historic data, if the NI Category is such that a Scheme Contracted Out Number (SCON) is required, then the SCON should be loaded into the record with date effectively, for the whole tax year.

Record which assignments are associated with this NI category and add all the associations in the Assignments section.