Create and manage deductions

Summary

How to create and manage deductions in Sage Payroll.

Description

Deductions are amounts taken from the employee’s pay before they receive it. They can be either taken from an employee’s gross pay or their net pay. Pension contributions and loan repayments are typical deductions.

Resolution

Within Payroll, you can set up and edit the deductions you need to use.

TIP:

You can’t delete deductions in Payroll. You can remove deductions from an employee when you’re processing an employee’s pay details. To do this, select the discard button next to the relevant deduction.

Deduction types available >

Payroll supports different deduction types, organised into deduction categories.

When you create a new deduction, you base it on one of these deduction types. This determines whether it is a net deduction or a gross deduction.

Deduction Category	Deduction Type	Net or Gross?
Pensions	Pension	Gross
Pensions	Pension - PRSA	Gross
Pensions	Pension - RAC	Gross
Net Deductions	Christmas Club	Net
Net Deductions	Social Club	Net
Net Deductions	Other Net Deduction	Net
Gross Deductions	Salary Reduction	Gross
Gross Deductions	Other Gross Deduction	Gross

To create a new deduction >

Select Settings, then select Payments and Deductions.
Select Deductions, then select Create New Deduction.
Enter the details of the new deduction.
Select Save.

Once you create a deduction, you can edit it. Select Edit next to the deduction in the list to change its name or description. You can't change the deduction category or type.

Item	Description
Deduction Category	See Deduction Types Available section above.
Deduction Type	Deduction Types Available section above.
Name	The name of the deduction. This appears on payslips. You can accept the default name or enter your own.
Description	Text to explain the purpose of the deduction. You can accept the default description or enter your own.
Employee’s Standard Contribution	This is only available for Pension deductions. The employee’s pension contribution amount or percentage. You can enter a fixed amount or percentage contribution.
Employer’s Standard Contribution	This is only available for pension deductions. If applicable, enter your company's standard pension contribution. This can be a fixed amount or a percentage of pay.

The deduction now appears in the Deductions tab and can be added to an employee's pay when you process a pay run.

Solution Properties

Solution ID: 222001000101709
Last Modified Date: Tue Aug 25 11:00:22 UTC 2026
Views: 0