I use Moneysoft and an employee has had a pay rise from 9 Feb. I read on here recently that Moneysoft uses the tax month for monthly salary calculations.
At the moment there is just annual pay which Moneysoft has split by tax month. So do I pay 6-8 Feb at old rate and then new rate from 9 Feb? To do this I assume I have to work out a daily rate or what do others do? Are there any helpful calculations within Moneysoft to assist with pay rises mid-tax-month?
Thanks
Replies (9)
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Whatever suits you
Moneysoft uses the entries on the Pay Details screen for the relevant tax month (M11 in this case). It may populate the Basic Pay field when you enter the annual pay for a starter, but the Basic Pay amount for any month can be changed and you can enter Hourly/Daily amounts (units x rate) and/or Additions amounts under 10 different user-specified descriptions. These will be shown clearly on the payslip.
It is up to you how to show it. You could calculate the monthly pay for February and overwrite the Basic Pay, but it wouldn't tell the employee anything about your workings. You could work out the pay increase on a daily basis (the most common practice is to divide the annual salary by 260 days for an employee who works 5 days a week), set up a Daily Rate described as 'Pay Rise' and pay it for 15 (working) days in addition to the old rate of Basic Pay, but remember to change the Basic Pay for March to the new rate.
I am not aware of any calculator within Moneysoft that will do this for you.
Always best to let the employee have your workings
For something like this, or joiners and leavers, it is always best to show the employee your workings.
This saves confusion later - for example when an employee leaves, as it is amazing what employees can think they are still owed if they didn't understand these type of changes.
ask the employer
I always get the employer to tell me the exact ££ to enter. How they pro-rate the month's pay for a part-month is up to them.
That way I don't get sucked into having to justify my calculation to the employee.
Good advice
I always get the employer to tell me the exact ££ to enter. How they pro-rate the month's pay for a part-month is up to them.
That way I don't get sucked into having to justify my calculation to the employee.
Good advice from Red Leader.( In my case I am the employer.)
Agree with Red Leader
I always get the employer to tell me the exact ££ to enter. How they pro-rate the month's pay for a part-month is up to them.
That way I don't get sucked into having to justify my calculation to the employee.
That is exactly what we do now, as we have had to explain to clients there is more than one way to calculate the changes part way in a month. We advise that the employer and employee should agree on the value before sending us the total amount to show on the payslip. It has saved us hours of work justifying calculations...
Month of change
Don't rely on the software in the month of change.
Do the calcs yourself on the back of a fag packet, then you know they're right.
Get the employer to approve them.
Tax month?
You can set the month end to be the last day (or another date) in the month, and not to the 5th. But don't change this until the new tax year! I always set the periods for the calendar month
Short ?
Thanks for all the comments, this client would just want me to calculate it and it does appear to be very manual.
If you change the period to calendar month then I assume there will be a short month in April?
Wouldn't that give rise to questions on payslips?
February's the short month, not April .....
No - I'd pay them for the whole month, notwithstanding part falling in another tax year. If that bothered me, I'd set payday at 5th of the month.
If the employee gets a regular salary, I'd divide it by 12 (or 52) and pay that each month. Employees lose out on a day's pay in leap years, obviously.
If pay's variable, I'd set a cut-off date about 7-10 days before payday to allow the processing to take place.