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Salary sacrifice and PAPDIS: what you need to know 

Salary sacrifice (also known as salary exchange) lets the companies employees swap part of their gross pay for pension contributions. It’s a tax-efficient setup that can save on National Insurance for both the business and their team.

Here’s how to use the PAPDIS standard with Thrive, in partnership with Smart Pension, to make sure everything runs smoothly.

1. Confirm what’s agreed

Before you upload anything:

  • Make sure the team member has signed a salary sacrifice agreement.

  • Check the date it kicks in.

  • Update the payroll settings so the sacrificed amount is treated as an employer contribution.

2. Update your payroll software

You’ll need to:

  • Show reduced gross pay for anyone using salary sacrifice.

  • Stop pension contributions being deducted from their net pay.

  • Increase employer contributions to cover both the usual amount and what the employees sacrificed.

3. Export the PAPDIS file

When you run payroll:

  • Export the file in PAPDIS format (usually CSV).

  • Make sure it’s set up to work with Smart Pension.

4. Format the data correctly

To show salary sacrifice in the PAPDIS file:

  • Set Employee Contribution Amount to 0.00.

  • Add the full contribution (theirs and the employers) under Employer Contribution Amount.  

  • Use S in the Contribution Basis column to show it’s salary sacrifice.

Example:

PayrollCode EEContribns ERContribns ContsBasis
12345 0.00 150.00 S
 

5. Double-check the numbers

Before exporting a company’s data:

  • Review the salary sacrifice calculations yourself, or confirm them with the company’s accountant or payroll contact.

  • Make sure the figures going into the company’s payroll software are accurate.

It’s a simple step that helps prevent bigger issues later, like incorrect contributions or PAPDIS errors.

6. Upload through the portal

  • Log into your Thrive Adviser portal.

  • Head to the payroll & contributions section.

  • Upload the PAPDIS file.

  • Use the Employee Change Request file to catch any updates before each pay run.

7. Check for errors

Thrive will flag any issues before submission. The most common ones?

  • Missing NI numbers.

  • Invalid contribution basis.

  • Employee contributions not set to 0 for salary sacrifice.

8. Review and submit

  • Check the summary.

  • If everything looks good, hit submit. Thrive will handle the rest and pass the data to Smart Pension.

9. Keep the records

For compliance and peace of mind, keep:

  • A signed salary sacrifice agreement for each person.

  • Copies of any PAPDIS files.

  • Upload confirmations from the Thrive portal.

Not sure about something?

We’ve got your back. Chat with our support team, call us, or drop us an email.

Need more detail? Check out our full PAPDIS Specifications and Assessment Codes Guide.