---
title: How to create and apply Allowance on PaidHR
description: "Payroll \nAllowances"
---

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1. [PaidHR Help Centre](https://support.paidhr.com/)
2. [Payroll Management](https://support.paidhr.com/payroll-management)
3. [Allowances](https://support.paidhr.com/payroll-management#allowances)

# How to create and apply Allowance on PaidHR

## Allowances are additional payments included in an employee’s monthly compensation, separate from the basic salary. They are meant to cover specific work-related or personal expenses such as housing, transportation, meals, and similar costs.

**How to Create Allowance on PaidHR**

PaidHR provides default allowances, but you can also create custom ones, such as a lunch allowance.

- From the sidebar, scroll to **Compensation**.
- Click the dropdown arrow next to **Payroll** and select **Configuration**.
- At the top of the page, click **Allowances**, then select **Create New Allowance**.

![](https://26055346.fs1.hubspotusercontent-eu1.net/hub/26055346/hubfs/undefined-Jul-15-2026-04-21-32-4908-PM.png?width=1289&height=592&name=undefined-Jul-15-2026-04-21-32-4908-PM.png)

- Enter a name for the allowance.
- Choose the **Pay Type**:
- **Regular** (paid during normal payroll cycles)
- **Off-cycle** (paid outside regular payroll cycles)
- Specify whether the allowance is taxable and whether it should be taxed separately or as part of the total gross pay.
- Select **Amortized** if the allowance should be paid gradually.
- Choose **Yes** if the allowance should be tied to employee confirmation.
- Click **Save** to complete the setup.  
  ![](https://26055346.fs1.hubspotusercontent-eu1.net/hub/26055346/hubfs/undefined-Jul-15-2026-04-21-51-2326-PM.png?width=1356&height=644&name=undefined-Jul-15-2026-04-21-51-2326-PM.png)

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