Pay an employee's bonus into a salary sacrifice pension scheme

You can choose whether or not to record the bonus as a payment. You only need to record it as a payment if you require the salary sacrifice deduction to appear on the payslip. If you don't record the payment, increase the employer contribution by the bonus amount instead.

▼ Don't process the payment, and increase the employer contribution

Check the employer contribution for the period

In Salary sacrifice pension schemes, the employer contribution value your software calculates each period includes the employee's contribution.

You need to calculate the employer only contribution, add the bonus to this and process it using the steps below.

Set the process date to the pay date on which the bonus is due.
Select the required employee on your employee list.
Click Payroll, then click Enter Payments.
Enter the correct payments for the period, not including the bonus.
Click the Information tab, then click Salary Sacrifice.
Note the Salary Sacrifice amount, this is the employee's contribution amount.
NOTE: If the employee has other salary sacrifice deductions set up, deduct these amounts from the Salary Sacrifice value to find the pension contribution.
Click the Employer's button in Enter Payments, note the Pension (Current) value, this is the total of employee and employer contributions.
Subtract the employee contribution in Step 6 from the total contributions in Step 7.

You've now calculated the employer only contribution. Note this value and proceed to the next section to continue.

Calculate and process the total contribution

To work out the total contribution, add the employer-only pension contribution to the amount of bonus to pay into the pension.

Enter this amount using the steps below.

Double-click the relevant employee on your employee list.
Click the Pensions tab, then click Manage Schemes.
Select the pension scheme and click Edit.
Note the current Employer Contributions settings.
Set the drop-down to Fixed Amount and enter the total employer contribution amount in the box to the right.
Click OK, then click Close.
Click Save in the employee record, then click Close.

When you process the next payroll and update records, the bonus is in the employer pension contribution.

Important next steps

Before you process the next payroll, change the employer contribution from a fixed amount back to the correct contribution value.

▼ Process the bonus payment, and increase the employee pension contribution

Check the employee contribution for the period

NOTE: Don't follow the steps below if you use the add employer NI savings to pension contribution feature.

The first step is to check the employee and employer pension contributions for the period you're processing.

Later in this process, you need to add the bonus amount to the employee's existing contribution and process this total amount as their contribution.

You also need to set the employer contribution as a fixed amount to the value of the contribution before you add the bonus.

Set the process date to the pay date on which the bonus is due.
Select the required employee on your employee list.
Click Payroll, then click Enter Payments.
Enter the correct payments for the period, not including the bonus.
Click the Information tab, then click Salary Sacrifice.
Note the Salary Sacrifice amount. This is the employee contribution amount that you add the bonus to and use in the next set of steps.
NOTE: If the employee has other salary sacrifice deductions set up, deduct these amounts from the Salary Sacrifice value to find the pension contribution.
Click the Employer's button in Enter Payments, note the Pension (Current) value, this is the total of employee and employer contributions.
Subtract the employee contribution in Step 6 from the total contributions in Step 7. This is the employer contribution value that you need in the next set of steps.

You've now noted the employee only contribution, and the employer only contribution. Continue to the next section to process the payment.

Calculate and process the total contribution

To work out the total contribution, add the employee's pension contribution to the amount of bonus to pay into the pension.

Enter this amount using the steps below.

Double-click the relevant employee on your employee list.
Click the Pensions tab, then click Manage Schemes.
Select the pension scheme and click Edit.
Note the current Employee Contributions settings.
Set the drop-down to Fixed Amount and enter the total employee contribution amount in the box to the right.
Note the current Employer Contributions settings.
Set the drop-down to Fixed Amount, and enter the employer contribution you noted earlier in the box to the right.
Click OK, then click Close.
Click Save in the employee record, then click Close.
Process the bonus payment in Enter Payments using a payment that's subject to PAYE, National Insurance and Salary Sacrifice (Pension Only) deductions.
TIP: For help with creating a bonus payment, follow the set up payments article.

When you process the next payroll and update records, the bonus is in the employee's pension contribution.

Important next steps

Before you process the next payroll, change the employee's contribution values from a fixed amount back to the original contribution values.