Choosing the Type for Pay Items – Buddy (UK)

If you are adding a custom pay item (see: Custom Pay Items), you need to select a pay item type that will affect payslip calculation and/or tax reporting. The most commonly used type is Cash, as this is a flat increase to the gross (if taxable).

Note that currently, you may still see some additional types of allowances that have no additional impact to UK Payroll. This is noted in the below table.

*Table of Pay Items Types and their Use Case*
Pay Item	Explanation and Use Case
Basic	A basic allowance is when an employee has multiple basic rates and will have a top-up of basic allowance to cover the difference.
Multiplier	Multiplier allowances are used when you need to insert an amount with a multiplicable (e.g. £1.95 per night shift). In the advanced setting, you can set a default rate. This can be overridden in the Salary Details.
Deduction	A deduction is used when the allowance is always to be included as negative (e.g. Advanced Payment)
Commission	A commission is a percentage, saved for each employee in their Job & Salary rates. When inputted into the Payroll, Buddy will calculate the percentage of the inserted amount. (e.g. if the commission is set as 10% and you input £500, Buddy will create a commission of £50)
Cash	Cash is the most common type of allowance. This will increase the gross or take-home pay by the specified amount
Hourly	An hourly rate is set for hourly allowances, and the rate needs to be set per employee in their Job & Salary details (e.g. £0.48 per hour). Hours then can be inputted into each payroll for the allowance to be calculated
Daily	A daily rate using a default rate of the employee's wage based on working days.
Hourly Deduction	Similar to an Hourly allowance, however it is always considered as a deduction.
Daily Deduction	Similar to Daily allowance, however it is always considered as a deduction.
Foreign Tax Relief	This pay item will be reported as a Foreign Tax Relief, lowering the total amount of taxes due by the employee
Net to Gross	This pay item will calculated as a net amount and will add a reverse calculation component to the payslip to cover any deductions generated
Charity Rounding	Automatically assigns remaining cents to charity
Basic Pay Percentage Adjustment	Adjusts pay of an employee by a percentage on the basic pay on a pro-rata basis
Notional Benefit	A benefit that is provided to the employee which does not impact cash or net amounts.
Materials (CIS)	Payments related to Materials in the Construction Industry Scheme (CIS)

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