Process advance pay

Follow the steps in our article to Process advance pay.

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When to use it

You can advance pay for any pay period, including monthly. However, only use advance pay if your employee's holiday covers at least one whole tax period.

For example, one full week for a weekly paid employee. If a weekly paid employee was due to take three days holiday, include those three days in their normal pay. 

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Tax and National Insurance (NI)

The Advance Pay option calculates the employee's tax and NI correctly over the whole holiday period, rather than in one lump sum. Sage 50 Payroll also flags the employee as being on holiday so that you don't accidentally process during their holiday period.

Pay element types

You can advance payments, deductions, attachments, loans, pensions and student loan deductions.

You can advance, attachment of earnings orders (AEO), loans and deductions when advancing an employee's pay.

For example, if a weekly paid employee has an AEO of £20 and you advance their pay for two weeks, the deduction is £40. The total advanced AEO deduction is calculated by multiplying the weekly amount by the number of weeks advanced.

 TIP: You can check and amend what's being deducted by selecting the relevant tabs in the Advance Pay window. 

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When not to use the advance pay option 

• You're processing statutory payments

  You can't advance statutory payments, such as sick pay and parental pay. If any of your employees are receiving statutory payments, you must update these particular employees for each pay period. This ensures their tax and NI calculate correctly

• Your pension provider requires a contribution file for every period
  

  If your pension provider doesn't accept a single file that covers the full advanced period, process each period separately rather than advancing pay

• You process a salary sacrifice pension scheme
  We recommend that you pay each pay period separately when processing a salary sacrifice scheme. This is to ensure your salary sacrifice calculates correctly
• The employee receives benefits
  Many benefits are calculated period by period, so it can cause confusion if they're calculated and paid using the Advance Pay option

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Advance pay on reports

Pre-update reports

Payments processed using the Advance Pay option automatically appear as a separate entry on the employee's payslip. They're included in the Gross Pay value on other pre-update reports, for example Payment Summary Part 1.

Post update reports

The employee's P11 displays On Holiday for any advanced pay periods. The Payment Summary History reports however, display zero values for any advanced pay periods.

To check if zero values on the Payment Summary History report mean no pay, run the employee's P11 report and look for On Holiday.

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Employee leaves 

If you process an employee with advance pay and they leave before the last period advanced, check if their pay must change.

If you paid the employee too much or too little, you need to reprocess their payroll. To do this:

1. Rollback the employee to the period you processed the advance in. 
    TIP: For help to rollback, follow the Rollback option article.
2. Reprocess each individual period with the correct pay, up until the period they leave.
3. Process the correct final payments as normal.
4. Process the employee as a leaver.
5. Submit a full payment submission (FPS) adjustment to inform HMRC of the changes.

For the exact over/under payment, compare what you paid the employee in the original advance to what they're due over the reprocessed periods.

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