Process a bonus payment

Pay element settings

It's crucial that you set up the payment correctly. If you're unsure of the settings to use on your payment, contact:

• HMRC, to check if you need to deduct tax or National Insurance (NI)
• Your Pension provider to check whether to include the bonus in pensionable or qualifying earnings
• DWP or the relevant issuing authority to check if you need to include the bonus in attachment of earnings calculations

Set up the bonus payment

Typically, bonuses are subject to tax and NI. If so, follow the steps below.

1. Click Company then click Pay Elements.
2. Click New and enter the required description.
3. Select the PAYE and National Insurance check boxes.
4. Clear or select the remaining check boxes as required.
5. Click OK, then click Close.

If tax or NI don't apply, clear the relevant check boxes in Step 3 above.

 NOTE: Ensure you set the qualifying earnings and pension main checkboxes correctly. Incorrect settings cause the 'contribution is less than the regulatory minimum' error in Enter Payments.  

Cash awards

If you provide a cash award, include the value of the award in the employee's gross pay and deduct tax and NI as normal.

To do this, use a pre-tax, pre-NI payment for the value of the cash award. Alternatively, if you want the employee to receive a specific net amount, process the award as a net payment.

Assign the pay element to an employee

1. Double-click the relevant employee.
2. Click the Employment tab, then click Pay Elements.
3. On a new line beneath the last payment on the list, click the finder button.
4. Choose the required description, click OK.
5. Enter the relevant hours and rate.
6. Click Save, then click Close.

To assign a pay element to several employees at the same time, use the global changes option.

Removing the bonus payment

If you pay a bonus then don't need to use it again, change the status of the payment to not in use:

1. On the Employee List, select the required employees.
2. Click Employee then click Employee Record.
3. Click the Employment tab then click Pay Elements.
4. Set the In Use column for the Christmas bonus payment to No.
5. Click Save then click Save.
6. To move onto the next employee, click Next then repeat steps 3 to 5 for each employee.