The controls for the processing of child care payments need to be set up in Child Care tab of Payroll Parameters. (Payroll > Definitions).
There are four groups of parameters, one for each of the elements of child care, i.e. SMP – Statutory Maternity Pay, SPP – Ordinary Statutory Pay, ASPP – Additional Statutory Pay and SAP – Statutory Adoption Pay.
The details required are as follows:
- Average Weekly Pay – this value as supplied by the Inland Revenue defines the Average Weekly Pay that the employee must have been receiving in the defined period prior to the claim for Child Care in order to be entitled to payment.
- Total Weeks – this value as supplied by the Inland Revenue defines the maximum number of weeks to which the employee is entitled to child care payments. When entering Child Care against the employee, it will be possible to amend the number of week to be lower than the value entered here, but it will not be possible to increase the number of weeks.
- Number (%) Rate – this value as specified by the Inland Revenue defines the number of weeks at which the Child Care payments are paid as a percentage of the employee’s average weekly earnings.
- Upper Rate (%) – this value as specified by the Inland Revenue defines the percentage of the employee’s average weekly earnings that should be paid when applicable.
- Statutory Weekly Value – this value specified by the Inland Revenue defines the value to be paid when the percentage above in not applicable.
Using the value entered above, Maternity Pay would be paid for 6 weeks at the higher of 90% of the employee’s average weekly pay or £128.73, and then for 33 weeks on the lower of 90(%) of the employee’s average weekly pay or £128.73
Using the values entered above Ordinary Paternity Pay, Additional Paternity Pay and Adoption Pay would be paid for 2, 20 and 29 weeks, respectively at the lower 90% of the employee’s average weekly pay or £128.73.
Note: the values shown in the screenshot above are those that will be in use from April 2011.
The details shown in this screen can also be updated by using the function Parameter Import (Payroll > Functions) when a new import file is provided by Unit4 as a result of the Inland Revenue announcing changes to the Statutory Values.
The rebate percentages to be applied to the Child Care payments, can be specified either on Default tab in Payroll Codes (Note: defined later), or on Tax tab of Payroll Parameters.
The benefit of defining the percentages in Payroll Template, is that you may have different rebate percentages for different payroll templates, depending on the size of the payroll. The percentages entered, affect values submitted on the End of Year Inland Revenue Returns, as well as being used to determine the general ledger postings generated by the payment.
If percentages are defined at both payroll code level and payroll template level, those at the payroll template level will take precedence.
There are fours pairs of Payroll Codes used for Child Care processing. One for the payment itself (SMP, SPP, ASPP and SPP) and one for the rebate processing (SMPR, SPPR, ASPPR and SPPR). These eight codes will be defined by the system, but certain elements can be user defined.
On General tab for Payment Codes, the Payment/Deductions field should be set as Payment, for the rebate codes the field should be set as Deduction.
The Descriptions and Payslip Description fields can be changed if a different description is required.
On Controls tab for Payment Codes, the Update Pay Flag should be left blank, Tax and NI Flags should be ticked and Pension Flag can be ticked if required. General Ledger Flag should be ticked if your system interfaces with a general ledger.
For rebate codes, Update Pay, Tax, NI and Pension Flags can be left blank as the code is not used in the payroll calculation process. General Ledger Flag should be ticked if your system interfaces with a general ledger and the rebate part of the Child Care payment is to be posted to a different account to the Child Care itself.
No entries are required on Defaults tab for Payment Codes, but the rebate percentage can be entered into the Rate field on this tab for Rebate Codes. The percentage entered will affect values submitted on the End of Year Inland Revenues Returns, as well as being used to determine the general ledger postings by the payment. If percentages are defined at both the payroll code level and the payroll template level, those at the payroll template level will take precedence.
If General Ledger is ticked in Controls tab, then the GEN tab will be available and you may enter here the details of the accounts to which the general ledger postings are to be made.
The Analysis Type should be any of Build, Fixed, or This Code it should not be of type Entered as it will not be possible to assign a general ledger code when the Child Care wizard is used to create the payment entries.
If the Child Care rebate amount is not to be posted, then it will only be necessary to enter into the GEN Code field of the payment code where the Child Care payments are to be posted. The Double entry field should be left blank in order to have the balancing entry posted to the Wages Control Account.
If the Child care rebate amount is to be posted, then the following entries should be made:
- On payment code, the GEN code field should be set to the account that is to hold the cost to the Employer (i.e. the amount after rebate), the Double entry field should be left blank so that the balancing amount of the whole payment is posted to the Wages Control Account.
- On rebate code, the GEN code field should be left blank and the Double entry field should be set to the account that is to hold the rebate amount (i.e. the amount to be reclaimed from the Inland Revenue).
Note: It is not necessary to enter any details to other tabs of the payroll code maintenance screens.
Child Care Payments
HR Record – Child Care
A single wizard is provided to allow for the payment of the four Child Care options. The wizard can either be accessed via Payroll Functions within the HR Record, or via Payroll > Functions.
The first page of the wizard requests the entry of the employee who is to be given a Child Care payment.
The second page of the wizard requests the type of Child Care payment that it is to be made, all payment types are available for Females, and all bar Maternity pay are available for Males.
The third page of the wizard asks for the Date of Confinement. This date is used to check that the employee has been in employment long enough to be entitled to Child Care payments and also establishes the employees average weekly pay. The average weekly pay is also used to establish the employee’s right to Child Care payments and is also used to establish the value of the payments.
The fourth page of the wizard shows the Average Weekly Earnings that have been calculated for the employee. You may overwrite this figure. This may be required in the early days of a new site using the software when there is not enough historical data to correctly calculate an employee’s earnings.
The fifth page of the wizard is used to determine when the payments are to begin. If Use Start Date is ticked, then the Date entered on page 3 of the wizard is used as the start date. Otherwise, Start Year and Period are used to provide a start point.
The sixth page of the wizard shows the number of week’s payments that are going to be made in each pay period.
Weeks Paid can be amended f required. Periods can be deleted from the end of the list by using – and new entries can be added using +.
Click Run to update Fixed Payment and Working Files with the Child Care payments.
HR Record – Fixed Inputs
When the Child Care payments have been processed, one entry will be created in the Fixed Payments File for each period that a payment is to be made, with a start and end period both set to the payment period.
The standard processes for maintaining Fixed Payment records are available.
HR Record – Working File
When the Child Care wizard has been processed, if one of the periods for which a payment is generated is the current period, then a record will be created in Working File.
The standard processes for maintaining Working File records are available.
HR Record – Statutory
The amount of Child Care payments that an employee has received in the current tax year can be seen in Statutory, in HR Record > Balances. The values can be amended here if an incorrect amount has been entered against an employee in a past period.
HR Record – P14
The amount of Child Care payments that an employee has received in previous tax years can be seen in P14, in HR Record > Balances.
The values displayed can be amended by selecting Changes and then highlighting the field to be amended and entering the new value.
If an under or over payment of Child Care is recognised whilst payments are still continuing, then the value of the payment in future or current periods can be amended via Fixed Payments or Working File.
If an under payment of Child Care is recognised after the payments have finished, then an entry can be made directly to the working file using the relevant Child Care payment code, i.e. SMP, SAP, SPP or ASPP.
If an over payment of Child Care is recognised after the payments have finished, then it will be necessary to enter a deduction to the working file using a user created payroll code, and either Statutory or P14 used to amend the Child Care year to date figure (Note: depending on whether the overpayment was in this or a previous tax year).