Upgraded payslip tool now shows all types of pension contributions

LITRG are pleased to launch a new version of our popular payslip tool which shows pension contributions deducted after tax as well as pension contributions deducted before tax.

LITRG’s payslip tool extracts information from HMRC’s Basic Payroll Tools software to create a payslip – something BPT does not do (even though giving an employee a payslip is a legal obligation!) 

BPT is a very basic tool – it calculates tax and National Insurance Contributions on an employee's pay and that is about it. Because pension contributions made under 'relief at source' arrangements – basically those deducted from ‘net pay’– do not affect the amount of tax or National Insurance an employee pays, the field was not used in the calculation by BPT and therefore did not flow through to our payslip tool.

For employers with employees making relief at source pension contributions, as a workaround, we were advising that they make the appropriate adjustments to the payslip by hand to reflect all the deductions and the true take home pay position.

With more and more employers having to deal with pension contributions as a consequence of the auto enrolment workplace pension programme, we felt that this was less than ideal and so, with the help of our brilliant software developers, we have found a solution.

As such, both types of pension contributions should now show on the payslip produced by our tool:

  • Those made under 'net pay arrangements' – where the pension amount is deducted BEFORE tax is calculated (meaning the employee receives tax relief there and then)
  • Those made under 'relief at source' arrangements – where the pension contribution is deducted after tax is calculated and HMRC later send the tax relief to the pension scheme.

We hope that this will make the payroll process slightly easier for you, however if you have any questions or comments, please do get in touch.