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Benefit in kind (BIK) recalculation

Created on  | Last modified on  Highlight Matches

Summary

How to use the BIK recalculation feature in Sage Payroll to recalculate tax and PRSI from previous pay periods.

Description

The BIK recalculation feature enables you to recalculate tax and PRSI from previous pay periods.

You need to do this when an incorrect amount of BIK has been processed in one or more pay periods.

It does not actually change any values in the employee's records. It is used for reporting purposes only. You use this facility to recalculate the pay periods.

Then you print the BIK recalculation report and refer to Social Welfare and your local tax office to determine the best way of dealing with the recalculated values.

You make any necessary amendments to the employee's details manually.

The BIK recalculation option recalculates:

  • tax
  • PRSI Code
  • employee PRSI
  • employer PRSI
  • tax and PRSI for pay periods subsequent to the last one in which an incorrect BIK amount was processed

To carry out BIK recalculation, the payroll's status must be 'S' or 'P' (start of pay period, or end of pay period).

Gross BIK

This is the most common type of BIK payment, and has the most straightforward effect on an employee's payslip.

The employee pays tax and PRSI on the amount of benefit specified as Gross BIK.

The employee's nett pay is reduced as a result of the gross BIK amount.

Net BIK

You use Nett BIK to give the employee the full value of the BIK. The employer pays tax and PRSI on the BIK for the employee.

The employee's nett amount is entered on the payslip, and is automatically grossed back up by the program.

Click the Time and Pay's Payslip button to view this amount on the payslip. The employee's nett pay remains the same as it was before the Nett BIK was entered.

If you have processed an employee's pay details using a net to gross payment, you can't record Nett BIK

Only certain benefits can be grossed up. For further details, visit www.revenue.ie.

Resolution

Process a BIK recalculation

  1. Click Processing, then click BIK Recalculation.
  2. Select the relevant employee.
    The window lists the pay periods the employee has been paid in this tax year. Only the New BIK TP figure can be changed.

  3. Click the relevant pay period.
  4. Enter the New BIK TP amount, then click Recalculate.
    The subsequent pay periods are also recalculated, and all the new values are displayed in the New Calculation section. Following the recalculation, if you change the New BIK amount value, the New Calculation section prompts you to click Recalculate again.

  5. Click Report to view a report detailing the employee's existing amounts and the recalculated amounts.

The negative BIK option

the process for making corrections to a benefit in kind (BIK) has been simplified by the ability to enter a negative BIK within Enter Time and Pay to correct the employee's BIK year to date (YTD) value.

As the negative BIK value is included on the timesheet, you don't need to submit historical correction payroll submissions to Revenue. Find out more in our handy Enter a negative benefit in kind (BIK) value guide.

Make BIK adjustments

Back up your data, then complete the following steps:

  1. From the menu bar at the top of your window, click Processing then click Employee Details.
  2. Next to the Surname box, click browse and click the relevant employee.
  3. Click the ETP tab.
  4. For each period that holds incorrect BIK calculations, edit the following information:

    TIP: To help you with making these changes, use the detailed BIK Recalculation report that you printed or saved in the previous section.

    Gross PayEnter the correct gross pay for this period.
    TaxableEnter the correct taxable pay for this period.
    PRSIable E'eEnter the correct amount of gross pay that is subject to employee PRSI calculation this period.
    PRSI E'eEnter the amount of PRSI the employee should have paid this period.
    PRSI Code E'eIf necessary, enter the correct PRSI code for this period.
    PRSIable E'rEnter the correct amount of gross pay that's subject to employer PRSI calculation this period.
    PRSI E'rEnter the correct amount of PRSI that the employer should have paid this period.
    PRSI Code E'rIf necessary, enter the correct PRSI code for this period.
    BIK AmountEnter the correct amount of BIK for this period.
    Pay for USCEnter the correct pay for USC for this period.
    USCIf the employee's USC status is normal
    No change is necessary, as USC automatically refunds when you next save the employee's timesheet.

    If the employee's USC status is either week 1 or emergency
    Enter the correct amount of USC for this period.
  5. Click the Payments tab.
  6. Locate the relevant BIK payment, then enter the correct year to date value in the Tax Yr Value box.
  7. Click Save, then click Cancel.

If BIK is overcharged - Refund any overpayments

  1. From the menu bar at the top of your window, click Processing then click Time and Pay.
  2. Under Entry mode, select Random then click Continue.
  3. Next to the Employee box, click browse and click the relevant employee.
  4. Make a note of the employee's Tax Status.
  5. Click the Override tab, then do one of the following:
    • If the employee's Tax Status is Week 1 or Emergency, proceed from steps 6
    • If their Tax Status is Normal, skip to step 8
  6. Under Tax Override, complete the following information:

    + / -Select the minus symbol.
    ValueEnter the amount of tax you want to refund to the employee.

    NOTE: If the employee's Tax/USC Status is Normal, you don't need to use the Tax Override option. The tax refund automatically appears on the employee's next timesheet.

  7. Under USC Override, complete the following information:

    + / -Select the minus symbol.
    ValueEnter the amount of USC you want to refund to the employee.
  8. Under PRSI Override, complete the following information:
    + / -For both the employee and employer options, select the minus symbol.
    EmployeeEnter the amount of PRSI you want to refund to the employee.
    EmployerEnter the amount of employer PRSI you want to refund.
  9. Click the Data Entry tab.
  10. Enter the employee's normal pay details.
  11. To preview the employee's payslip, click Payslip and check the values are correct.
  12. To save the employee's timesheet, click Save then click Cancel.

If BIK is undercharged - Claim back any underpayments

  1. From the menu bar at the top of your window, click Processing then click Time and Pay.
  2. Under Entry mode, select Random then click Continue.
  3. Next to the Employee box, click browse and click the relevant employee.
  4. Make a note of the employee's Tax Status.
  5. Make a note of the employee's Tax Status.
  6. Click the Override tab, then do one of the following:
    • If the employee's Tax Status is Week 1 or Emergency, proceed from steps 6.
    • If their Tax Status is Normal, skip to step 8.
  7. Under Tax Override, complete the following information:

    + / -Select the plus symbol.
    ValueEnter the amount of tax you want to claim back off the employee.

    NOTE: If the employee's Tax/USC Status is Normal, you don't need to use the Tax Override option. The outstanding amount of tax to be paid automatically appears on the employee's next timesheet.

  8. Under USC Override, complete the following information:

    + / -Select the plus symbol.
    ValueEnter the amount of USC you want to claim back off the employee.

    NOTE: If the employee's Tax/USC Status is Normal, you don't need to use the USC Override option. The outstanding amount of USC to be paid automatically appears on the employee's next timesheet.

  9. Under PRSI Override, complete the following information:

    + / -For both the employee and employer options, select the plus symbol.
    EmployeeEnter the amount of PRSI you want to claim back off the employee.
    EmployerEnter the amount of employer PRSI that was underpaid.
  10. Click the Data Entry tab.
  11. Enter the employee's normal pay details.
  12. To preview the employee's payslip, click Pays$kcs_do_not_editlip and check the values are correct.
  13. To save the employee's timesheet, click Save then click Cancel.