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Recalculate benefit in kind

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Summary

Use the benefit in kind (BIK) recalculation feature in Sage 50 Payroll Ireland to recalculate tax and PRSI from earlier pay periods.

Description

About benefit in kind recalculation

Use the benefit in kind (BIK) recalculation feature when you process an incorrect BIK amount in one or more pay periods. The recalculation doesn’t change the employee’s payroll records. It shows the corrected values for reporting purposes only.

After the recalculation, use the BIK Recalculation report to identify any required adjustments. You need to enter these adjustments manually.

The recalculation includes:

  • Tax
  • Employee PRSI
  • Employer PRSI
  • Employee PRSI code
  • Employer PRSI code
  • Tax and PRSI for later pay periods

The payroll status must show one of the following:

  • S: Start of pay period
  • P: End of pay period

Gross BIK

Gross BIK represents the value of a benefit before tax and PRSI. The employee pays tax and PRSI on the gross BIK amount. This reduces their net pay.

Net BIK

Net BIK gives the employee the full value of the benefit. The employer covers the tax and PRSI due on that value. Sage 50 Payroll Ireland grosses up the amount automatically. The employee’s net pay remains unchanged.

You can’t record net BIK when you use a net-to-gross payment for the employee.

Revenue only allows grossing up for certain benefits. Visit revenue.ie for more information.

Resolution

Process a BIK recalculation

  1. Go to Processing, then select BIK Recalculation.
  2. Select the relevant employee.
  3. Select the pay period that contains the incorrect BIK amount.
  4. Enter the corrected amount in New BIK TP.
  5. Select Recalculate.
  6. Select Report to open the BIK Recalculation report.

The window shows each pay period processed for the employee during the current tax year.

You can only change the New BIK TP value. The recalculation also updates all later pay periods.

When you change the BIK amount after a recalculation, select Recalculate again.

The report compares the existing values with the recalculated values.

Enter a negative BIK value

You can enter a negative BIK value in Enter Time and Pay to correct the employee’s year-to-date BIK value. The negative value forms part of the current timesheet. You don’t need to submit historical correction payroll submissions to Revenue.

Enter the recalculated values

Back up your data before you enter any changes.

  1. Go to Processing, then select Employee Details.
  2. Select Browse beside Surname, then select the employee.
  3. Open the ETP tab.
  4. Select each period containing incorrect BIK values.
  5. Enter the correct values from the BIK Recalculation report.

Enter the following information where required:

Field Value
Gross Pay The correct gross pay for the period.
Taxable The correct taxable pay for the period.
PRSIable E'e The correct pay subject to employee PRSI.
PRSI E'e The correct employee PRSI.
PRSI Code E'e The correct employee PRSI code.
PRSIable E'r The correct pay subject to employer PRSI.
PRSI E'r The correct employer PRSI.
PRSI Code E'r The correct employer PRSI code.
BIK Amount The correct BIK amount.
Pay for USC The correct pay subject to USC.
USC The correct USC amount when the employee uses Week 1 or Emergency basis.

When the employee uses the Normal basis, Sage 50 Payroll Ireland adjusts USC when you next save their timesheet.

  1. Open the Payments tab.
  2. Select the BIK payment.
  3. Enter the correct year-to-date value in Tax Yr Value.
  4. Select Save, then Cancel.

Refund an overpayment

Use this process when the employee paid too much tax, USC or PRSI because of an incorrect BIK amount.

  1. Go to Processing, then select Time and Pay.
  2. Select Random under Entry mode, then Continue.
  3. Select Browse next to Employee, then select the relevant employee.
  4. Open the employee’s tax status.
  5. Open the Override tab.
  6. Choose the relevant override options.

Tax override

For an employee on Week 1 or Emergency basis:

  1. Select the minus symbol under Tax Override.
  2. Enter the tax refund in Value.

For an employee on the Normal basis, leave the Tax Override section unchanged. The refund appears on the next timesheet.

USC override

For an employee on Week 1 or Emergency basis:

  1. Select the minus symbol under USC Override.
  2. Enter the USC refund in Value.

For an employee on the Normal basis, leave the USC Override section unchanged. The refund appears on the next timesheet.

PRSI override

  1. Select the minus symbol for the employee and employer options.
  2. Enter the employee PRSI refund in Employee.
  3. Enter the employer PRSI refund in Employer.

Complete the timesheet

  1. Open the Data Entry tab
  2. Enter the employee’s normal pay details
  3. Select Payslip and review the values
  4. Select Save, then select Cancel

Recover an underpayment

Use this process when the employee paid too little tax, USC or PRSI because of an incorrect BIK amount.

  1. Go to Processing, then select Time and Pay.
  2. Select Random under Entry mode, then select Continue.
  3. Select the browse option beside Employee, then select the relevant employee.
  4. Open the employee’s tax status.
  5. Open the Override tab.
  6. Choose the relevant override options.

Tax override

For an employee on Week 1 or Emergency basis:

  1. Select Add under Tax Override.
  2. Enter the tax underpayment in Value.

For an employee on the Normal basis, leave the Tax Override section unchanged. The outstanding tax appears on the next timesheet.

USC override

For an employee on Week 1 or Emergency basis:

  1. Select Add under USC Override.
  2. Enter the USC underpayment in Value.

For an employee on the Normal basis, leave the USC Override section unchanged. The outstanding USC appears on the next timesheet.

PRSI override

  1. Select Add for the employee and employer options.
  2. Enter the employee PRSI underpayment in Employee.
  3. Enter the employer PRSI underpayment in Employer.

Complete the timesheet

  1. Open the Data Entry tab.
  2. Enter the employee’s normal pay details.
  3. Select Payslip and review the values.
  4. Select Save, then Cancel.

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