Negative Gross Payment (deduction before tax)

There may be times where you need to reduce an employees gross pay due to an overpayment of gross pay in a previous pay period. In this case you would not use a "deduction", as a deduction is taken off the pay after PAYE has been calculated and deducted.

To create a deduction which reduces the gross pay:

1. Select General Program options (from FILE then GENERAL PROGRAM OPTIONS)
2. Select the Advanced tab.
3. The option "Allow Negative Taxable Allowances (Gross Reduction)" will be available.
4. Click this so that a tick appears, then click OK.
5. You will now need to restart Payroll Pro.
6. Open your payroll data, and select Allowances & Extras.
7. Click NEW to create a new allowance.
8. Enter a code of up to 4 characters and a name.
9. Ensure "Taxable" is selected, and then click "Negative (Gross Reduction)"
10. Tick other options depending on what your requirements are. In most cases you would select "Reset to zero after employee paid", as in most cases this would not be used regularly.

 

To use this newly created item:

1. Under "Enter Current Pay" select "Allowances/Extras".
2. Enter the new code in the Allowances column (the second column).
3. Enter a positive number for the amount, and a negative number for the units. The total of the amount times the units will then be a negative number.
4. This amount will be subtracted from the employees gross pay.

 

Use this option with care. Allowances with this option selected will reduce the gross taxable amount.
In turn this will lower the PAYE and the Student Loan deduction, as these are both calculated on the reduced gross amount.