How do I set up a reducing balance deduction?

When adding a new Deduction Pay Element, you will need to select the field "Reducing Balance".

A reducing balance deduction requires that you enter a balance when setting up the deduction. The deduction will be made as usual, and the balance will reduce. When the balance reaches zero, the deduction will automatically stop. (Read the Tax Arrears help for an example of a reducing balance deduction).