Previously, there was no function in the system to reduce the worker's tax code automatically in the illustration if he earns more than £100,000/year. The illustrations screen would display the tax code of 1257L as a default and it would then require a manual calculation/edit of the tax code field to create a more appropriate calculation.
So, we have implemented the function in the system for you to enable the newly added option next to the tax code called "Auto-Reduce PA" when creating Umbrella (or) CAE/PAYE illustration.
If you check this box, the system will calculate the taxable pay when you run illustration and if it is more than £100,000/year, the system will give you the warning as below:
The system will automatically reduce the tax code to what it should be for the given rate and will display in the warning message. If you click "Proceed", it will generate the illustration and you can download the illustrative payslip as well (The updated tax code will get displayed in illustration and Payslip PDF).
NOTE:
The system will reduce tax code and show the warning only if you enable the check box - Auto-Reduce PA.
In the summary box of the illustration PDF, it will show you the reason for reducing the tax code.
The same will get displayed in Illustrative Payslip as well.
If ‘Auto-Reduce Personal Allowance’ is enabled and you try to create illustration for both ‘Umbrella’ and 'CAE' in the same time, the system will throw an error "if Auto-Reduce Personal Allowance is enabled, Umbrella and CAE/PAYE illustrations cannot be run together". This is because both has different calculations for working out the taxable pay and it is not allowed. You can run it separately in this situation.
Also, when you hover over the tax code (i icon), it will show you the information.
Calculate Holiday Pay on Top of Rate - Illustration
We have introduced a new option when you create the illustration for CAE/PAYE called "Calculate Holiday Pay on Top of Rate" close to Accrue Holiday Pay option.
If you enable this option while running CAE/PAYE illustration, holiday pay will get calculated on top of the actual basic pay. The illustrative payslip will look like this:
In the KID document, it will show in Example rate of Pay as below (+ Holiday Pay):
We hope you like this feature in the illustration module😎😍