How Do I Create a Foreign Tax Adjustment Deduction?

How Do I Create a Foreign Tax Adjustment Deduction?

Cintra iQ has the ability to flag deduction headings as Foreign Tax Adjustments which allows the overall tax reported to HMRC (on the FPS) or to the employee (on the P45 or P46) to incorporate this adjustment.  Usually this reduces the amount of UK tax that an employee pays, due to paying tax overseas. Foreign tax adjustments are included in the following reports/documents under tax:
  1. P45
  2. P60
  3. P32
  4.  FPS
  5. Payroll analysis summary
UK PAYE tax will continue to be calculated without taking into account the amount of any Foreign Tax Adjustment and the employee’s payslips will continue to show the to date tax figure as the amount calculated prior to any adjustments. Cintra iQ allows for a deduction adjustment when tax has been paid on the employees earnings to another country.

1. Create the ad hoc deduction definition

  1. Navigate to the Deductions Headings definition window.
    Go to Cintra iQ: Payroll> Payroll Setup> Adjustments> Deductions
  2. Click the New button. The New Deduction Heading form appears.
  3. Enter the desired Name.
  4. Select the desired Reporting Group from the drop-down list.
  5. Select Category: Ad Hoc Deduction.

  6. Click the Next button. The Ad Hoc Deduction form appears. 
  7.  On the Main Setting tab, enter the desired information.
  8. On the Other tab, select the Foreign Tax Adjustment option.
  9. Click the Apply button to save.
  10. Click the OK button to exit. The definition is now created.

2. Apply the Foreign Tax Adjustment to the employee

  1. Navigate to the employee's Payroll Period Input and Corrections form.
    Go to Cintra iQ: Employment Record> Forms> Payroll Period Input
  2. Navigate to the Voluntary Deductions tab. 
  3. Right-click New. The New Voluntary Deduction Record dialogue appears.
  4. Select Foreign Tax Adjustment from the Select Voluntary Deduction Record drop-down list.
    Note: This was set in the Ad Hoc Deduction form’s Other tab
  5. Click the Next button. The New Voluntary Deduction Record form appears.
  6. Enter a negative value as the Input Amount to apply a credit to the employee.
  7. Click the OK button. The deduction appears in the Voluntary Deductions tab.
  8. Calculate as normal.
    1. The Foreign Tax Adjustments are displayed on the Payment Deduction and Payroll Analysis reports.
    2. The Tax column on the Deductions From Pay is adjusted with the credit for the Foreign Tax paid in the Gross to Net report.
    3. The Altered Pay report has the Adjustment changes and the category of the change reported.
    4. The adjusted Income Tax figure is sent by the RTI FPS submission to HMRC.




    • Related Articles

    • How Do I Create Deduction Headings for Loans?

      Within Cintra  iQ, you can set up deduction heading for loans. To set up  a loan deduction heading Navigate to the Deduction Headings definition window. Go to Cintra iQ: Payroll> Payroll Setup> Adjustments> Deduction Headings Click the New button. ...
    • How Do I Create Deduction Headings for Voluntary Deductions?

      Within Cintra iQ, you can create deduction headings for Voluntary Deductions, which then be used when setting up a deduction to be applied to an employee. To create a voluntary deduction heading Navigate to the Deduction Headings definition window. ...
    • How Do I Set Up Voluntary Deductions to be Applied Against an Employee?

      The Deductions form wihin Cintra iQ is used for all standing non-statutory deductions including attachment of earnings orders, loans, and voluntary deductions.  Use this Voluntary Deduction tab to set up any other voluntary employee deductions. The ...
    • What are the Tax and NI Details?

      Use the Tax and NI form within Cintra iQ to view and record the employee's tax and national insurance information. Go to Cintra iQ: Employment Record> Forms> Tax & NI Tax_NI Details Tax tab Use this tab to view and record tax codes. Tax Code History ...
    • How Do I Report on Payments and Deductions?

      Within Cintra iQ, you can calculate payrolled car and fuel benefits, van and fuel benefit and mileage benefit during a payroll period instead of submitting a P11D at the end of the year. You can also choose to payroll other benefits such as private ...