You can set up deduction items according to your company policy and requirements. To help get you started, we have pre-set some common deduction items for you. If these are not suitable for your own situation you can also create new deduction items with the PAYE tax, NI and Pension settings you require.
To set up the Deduction items, go to Chart of Setup from the Employer / Setup drop down menu. Click on the Deduction Setup link in the Payment & Deduction section. You can see here the list of pre-defined deduction items that cannot be edited. However you can add your own deduction items if the pre-set items do not meet your requirements.
To add the deduction items, simply enter the deduction item type in the box given and specify if each individual deduction item is subjected to PAYE, NI or pension contributions.
If you select DGP (Deduct from Gross Pay) the deduction will be taken from the employee’s pay before PAYE tax, NICs and Pension Contributions are calculated. If you select DNP (Deduct from Net Pay) the deduction will be taken from the employee’s pay after the PAYE tax, NICs and Pension Contributions are calculated.

Further, select Occurrence as Recurring or Non Recurring. Occurrence refers to how often the deduction will be applied to the employee's wages. If the occurrence is set as Recurring the deduction item will automatically be taken each and every time the employee's pay is calculated. If occurrence is set as 'Non-Recurring' the deduction item will only apply on a one-off basis in the next pay calculation you run for the employee and after that it will not automatically reappear. Now, click on the Save button to save the entered data. Further, select Occurrence as Recurring or Non Recurring.

Occurrence refers to how often the deduction will be applied to the employee's wages. If the occurrence is set as Recurring the deduction item will automatically be taken each and every time the employee's pay is calculated. If occurrence is set as 'Non-Recurring' the deduction item will only apply on a one-off basis in the next pay calculation you run for the employee and after that it will not automatically reappear. Now, click on the Save button to save the entered data.