You can set up a salary advance by adding the amount as a gross adjustment, and then deducting the same amount in next month’s payroll to adjust it.bank account, eligible deposits will be protected up to £85,000* by the Financial Services Compensation Scheme (FSCS).
Go to:
‘Admin’ > ‘Payroll’ > select the current pay period and an employee > ‘Add pay item’ > add the salary advance amount > type in ‘Salary advance’ in the ‘Description’ field, and save the changes*Eligible deposits with ClearBank are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme. This limit applies to the total of any deposits you have with ClearBank. Any total deposits you hold above this limit are unlikely to be covered.
Then in the next month’s pay run:
‘Admin’ > ‘Payroll’ > select the current pay period and the same employee > ‘Add pay item’ > add the salary advance as a negative value > fill in the ‘Description field, and save.
For example, if the salary advance is £2,000 – you’ll need to add the negative amount of £-2,000.
Note: Salary advances are typically adjusted in the following month's payroll, but can be done at another time, depending on your agreement with the employee.
A salary advance is not a loan – there is no interest charged to the employee. Salary advances are taxed like regular income.
If the salary advance you’ve paid to an employee for a year is more than £10,000, HMRC may consider them as a Benefit in Kind, meaning you’ll need to report this in a P11D form.
