Calculating Net-to-Gross Payments for the U.K.

This chapter discusses how to:

Set up net-to-gross calculations for earnings.
Enter net-to-gross payments.

Setting Up Net-to-Gross Calculations for Earnings

Some earnings, such as bonuses, are paid as net amounts, so you must calculate the corresponding gross amounts. For example, if you want to pay your employee a one-time bonus of 100 GBP, you can use Global Payroll for the U.K. to calculate the gross payment, which ensures that the employee receives 100 GBP after taxes and National Insurance contributions have been deducted.

Note. If you want to make net-to-gross payments that are subject to tax only or to National Insurance only, you must build your own net-to-gross process.

Set up net-to-gross payments for the U.K. in the core application using elements that are specific to Global Payroll for the U.K.. There are no specific pages in Global Payroll for the U.K. for setting up net-to-gross payments.

To set up net-to-gross calculations for an earning:

Define the earning that stores the net payment to be grossed-up on the Earnings Name page in the core application.

Global Payroll for the U.K. is delivered with earning GU ER TAXNI, which you can use for payments that are liable for both tax and National Insurance contributions. If you want the net amount that you enter to be liable for either tax only or National Insurance only, you must create your own earning. This earning is a member of the GU AC GRSUP SEG accumulator.
Define the earning that stores the grossed-up result of the net-to-gross process on the Earnings Name page in the core application.

Global Payroll for the U.K. delivers earning GU ER RESULT, which stores the grossed-up result in the core application. This earning is a member of the following accumulators: GU AC ALLPAY and GU AC TAXABLE.

Note. If you have created a net-to-gross earning that is subject to either tax only or National Insurance contributions only, you must create an additional earning that stores the corresponding grossed-up result.
Add both earnings to the earnings element group on the Element Groups − Members page in the core application.

Note. Global Payroll for the U.K. provides you with element group GBR EG ALLPAY, which contains both of these earnings. If you create your own earnings in Steps 1 and 2, you must add them to an element group.
Set up the necessary formulae to calculate the grossed-up amount on the Formula Name Page in the core application.

PeopleSoft delivers the following formulas that calculate the grossed-up amount:
- GU FM 2
  
  This formula determines the net amount to be grossed-up and provides the process with a first resolution for the gross amount.
- GU FM 3
  
  This formula is responsible for the iterative processing that calculates the actual gross amount.
- GU FM 4
  
  This formula populates the element GU VR RESULT, which displays the results of the net-to-gross process.
Set up a net-to-gross section, where all earnings are processed, on the Definition page in the core application.

Global Payroll for the U.K. delivers the section GBR SE NTG, which includes the net-to-gross earnings, the grossed-up earnings, and the formulas that the system processes.

Section GBR SE NTG references both the net payment earnings and the grossed-up result earnings, as well as the GU FM 2, GU FM 3, and GU FM 4 formulas.

GBR SE NTG is defined as a subprocess, with a maximum number of 15 iterations. If you are defining your own net-to-gross process, you can amend the number of iterations accordingly.

Warning! Do not change the delivered formulas and/or sections. Doing so may impact statutory calculations. If you create your own net-to-gross process, discuss this with your PeopleSoft consultant.
Add the net-to-gross section to the process list component on the Definition page in the core application.

Global Payroll for the U.K. is delivered with section GBR SE NTG in the GBR PR PAYROLL process list. The position of the section in the process list is important. You must place the process list prior to the tax and National Insurance processing so that the grossed-up amount is derived before tax and National Insurance are calculated.

Entering Net-to-Gross Payments

Set up the various components for resolving net-to-gross processing on the core pages. On the Positive Input page, enter the amount to be gross-up in the Amount field. In the Currency Code field, enter GBP as the currency.

Note. Use the pages in the core application to enter net-to-gross payments. There are no U.K.-specific pages in PeopleSoft Enterprise Global Payroll.

Global Payroll for the U.K. delivers element GU ER TAXNI, which is subject to both tax and National Insurance contributions. This element was defined so that the amount can be entered as Positive Input in the core application.