Enter Salary, PAYE and NI contributions

Usually an employee is paid a net salary after certain taxes/deductions have been taken into consideration. What follows is a suggestion of how you might account for these various components.

As an example, let's assume that an employee gets paid monthly and that the following values apply:

To reflect this in Accountsportal, you need to enter two transactions. Start with a Spend Money - General Payment transaction for the amount paid to the employee, followed by a Journal entry transaction to capture the taxes/deductions and show that they are payable to the HMRC at a later date.

1.Spend Money - General Payment transaction to reflect Amount paid to employee (e)

Proceed to enter the transaction as per the instructions in the link above. The following fields need special attention:

• Amount Spent: Enter the Amount paid to employee (a).
• Type: Type of transaction being entered which should be General. This field is automatically entered if you are processing a bank statement.
• Account: Enter the Salaries account.
• VAT Code: Select '0.0% - Out of Scope' or 'No VAT' (if not VAT registered)

2. Journal entry of PAYE(b) and NI(c + d)

This step will capture the taxes/deductions and show that they are payable to the HMRC at a later date. For more detail on entering journals view the instructions in the link above.

Line Item 1 raises the taxes as an expense in our books. The amount is the total of all (b) + (c) + (d). If you prefer, you could split this line into multiple debit lines to enter each category of tax/deduction against its own account.

Line Item 2 raises the liability for the amount the needs to be paid to HMRC at a later date.

At some point you will need to pay the HMRC the total amount of PAYE and NI due to them. This can also be entered as a Spend Money - General Payment transaction. In the example below, it is assumed that the HMRC is paid monthly for taxes/deductions. If you only pay quarterly, then you should adjust the amounts as required. The entry against the PAYE and NIC Payable account creates a debit entry which offsets the credit amount entered in the journal above.

• Amount Spent: Enter the Amount due to the HMRC (b + c + d).
• Type: Type of transaction being entered which should be General. This field is automatically entered if you are processing a bank statement.
• Account: Enter the PAYE and NIC Payable account.
• VAT Code: Select '0.0% - Out of Scope' or 'No VAT' (if not VAT registered)