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Agree this is critical, I have to manually set up reminders in my calendar to track every deduction, and then run separate reports to confirm when paid in full. Very time consuming, when a reducing balance should be a simple thing to implement for all deductions.

Vote Critical!!

Most payroll providers (including MYOB and others) already offer reducing balance functionality for deductions, and it would be a huge improvement if Xero did the same.
Why it matters:
Reducing balances remove the need for manual follow-up.
They ensure the correct deduction amount is applied each pay run.
They eliminate the risk of over-deducting, and avoid the admin burden of tracking balances separately.
Example:
If an employee has scissors sharpened for $150, I currently need to set up a recurring $15 deduction, then manually track when to stop it after 10 weeks. With reducing balances, the system would simply reduce the balance each week and automatically stop once paid off.
When you have dozens of employees at different stages of paying off tools, scissors, and other items, manual reminders (like calendar alerts) aren’t practical.
Some days I even consider moving back to MYOB because they already have this feature.
Please add reducing balance deductions to Xero Payroll. It will save small business owners significant time and prevent costly mistakes.

Are you able to add start and end dates for employee deductions? For example, when an employee buys tools and paying it back in 5 payments it would be great if one can add an end date so it will automatically stop deducting.

Add statutory deductions for contractors ie, court fines. With a reducing balance

This would be a great feature! We also have deductions for tool we bought for our staff, and they pay it off, it would be great to have a feature where I can put 4 or 5 payments, and it will automatically stop.

I also would like this feature. It is available in MYOB IMS as that is what we were using for a client before swapping to Xero payroll. It would show what was deducted and the remaining balance. Client often buys tools for staff which they then pay back and now I am going to have to make sure we have a manual reminder.

100% need this. We have all kinds of reducing balance deductions, e.g. Court Fines, Loans, Overpaid Wages etc that all need to be kept track of. Other Payrolls we can load a total amount and the balance will reduce until paid.

We also need the ability to create a Gross deduction for things like overpaid wages.

I agree! We just did a mini loan for an employee and they are paying it back on a weekly basis. It would be good to set up the total balance owed + weekly deductions (statutory deductions have this option already on some things - see photo). Doing it manually is just yet another thing to try and remember when its all paid up (and a risk of over-deducting!).

Yes, I would use a reducing balance deduction function in the payroll quite happily. I have had this function available in previous payroll software I have used, such as PC School and it was very helpful. I am currently processing a regular post tax deduction each pay cycle for a staff member and would have appreciated being able to set it up to just automatically process it until the target balance was met. Thank you.

I agree, our employees purchase tools and to track these manually is a real pain.
We had this feature when we were with MYOB and it worked so well and the employees could also see how much they have left owing.

Yes agree would be great to be able to have reducing deductions so we don't have to remember to stop a deduction ourselves eg for IRD, staff loan etc

I agree, please add a feature where you can set and forget the payroll deduction, that is, if I need to deduct $1000 from an employee for something over a 5 week period, then I don't need to remember to come back and stop the deduction. It only deducts to the maximum limit over a time period.

I need to be able to set a number of pays for recurring payroll deductions.
For example; my employee buys a laptop under salary sacrifice and wants to pay it back over a specified number of pay cycles.
At the moment I need to track this manually to ensure that the deduction is removed at the right time. It would be great if the software could do this for me.

This is very important to me.

Then when staff member purchase tools and put it on there tool account to pay off at 5% of their gross earnings or a set amount, also I have somewhere to put the total purchase amount in and each week it reduces. This is ALL automated, apart from when I enter in the total amount from the invoice to begin with. It is a reducing balance.