Pay codes are the calculation rules Moonworkers applies to the different parts of an employee's pay, from basic salary to other elements of their package. You manage them in the Pay codes tab.
What a pay code controls
For each pay code you set whether it is an addition or a deduction, and how it is treated for tax and reporting: whether it is taxable for PAYE, Niable for National Insurance, pensionable for auto-enrolment and your qualifying pension scheme, and whether it is Class 1A Niable. A pay code can also be flagged as a notional payment.
System, control and custom codes
Pay codes are grouped into three tabs. System codes and control codes are built in and part of the HMRC-driven engine, so you cannot edit them, but you can open each one to see how it is treated. Custom codes are the ones you create yourself.
Built-in system codes include BASIC (salary), ROHLPAY (rolled-up holiday pay), PAYINLIEU (payment in lieu), SEVERPAY (severance pay), AEOFEE (admin fee for an attachment of earnings order), PAYE (PAYE tax), NIC (National Insurance), STDLOAN (student loan), PGLOAN (postgraduate loan), CISDEDUCT (CIS deduction), CISCOST (cost of materials), PENSIONRAS (pension, relief at source) and PENSIONSS (pension, salary sacrifice).
Creating a custom code
To create a custom code, give it a code in capital letters as a reference, a clear label that people will read, and choose what it applies to: a fixed amount such as £500, a percentage of basic pay, a percentage of gross pay, or a percentage of net pay. You then assign the code to employees and enter the amount or percentage for each one.
A few terms explained
Class 1A National Insurance is the employer-only National Insurance charged on benefits in kind. An attachment of earnings order is a court instruction to deduct money from an employee's pay, and the AEOFEE code is the admin fee you are allowed to keep for processing it. A qualifying pension scheme is a workplace pension that meets the auto-enrolment standards.
Changing a code that is already in use
You cannot edit system or control codes. To change a custom code that has already been used in finalised pay, either create a new code with the rule you want and assign it instead, or remove the code from the affected pays, reopening them until the code is no longer referenced, then edit it and reprocess those pays.
Get started
In Moonworkers, go to Settings > Pay codes to view or create codes. Not signed in yet? Log in at https://payroll.moonworkers.co.uk/auth/login