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P.A.Y.E. splits


I realise that this may be somewhat an*l but I’ve come across what I consider a “limitation” in the way payroll transactions are treated. Either that, or I’m thick and could use a steer on how to accomplish what I’m wanting to do…

Since the change in November which brought in the automatic creation of payroll journals, I’ve noticed that the journal credits ledger 2210 with the amount the company pays to HMRC. In principle, that’s fine. However, 2210 is labelled simply “P.A.Y.E.” whereas 2211 is labelled “National Insurance”. I BELIEVE that the HMRC P.A.Y.E. system refers to both Income Tax and National Insurance Contributions. So I think re-labelling 2210 as “P.A.Y.E. - Income Tax” and 2211 as “P.A.Y.E - National Insurance” would be more consistent.

Why does this matter?

It would be nice to be able to split the tagging of payments to HMRC across these two ledgers in order accurately to keep tabs or run a customized report on how much Income Tax and NI (separately) an employee has been docked in their payslip. I can see no way of doing that at present as tagging a payment to “Tax” only offers “VAT”, “P.A.Y.E Liability”, or “Corporation Tax” and choosing PAYE only affects 2210.

I realise this may be a challenging feature to create as it would require the tagging (with the tax category) to interrogate the user about how much is NI vs Income Tax. Regardless, it seems a useful feature to add as it would allow the user much better insight into the tax affairs of the employees concerned.

Also, I think it would be useful to add the PAYE position (again, possibly itemized by Income Tax and NI, as above) to the standard “Tax Summary” report - it seems odd that it only currently tracks VAT and Corporation Tax…

What do you think? (or can you advise a better solution?).


Hello @Director

Thank you for your suggestion, and apologies for the delay in responding.

We’ll leave this thread open for others to add their comments on this.

However, you could do this manually for the time being if you wish. For example, with the payroll journal, simply add an additional line and adjust the amounts to reflect the actual values of each.

With tagging the tax payment, you could in theory create another journal for this between the two PAYE nominals and the bank account nominal, or if you’re a Power User, then you can split the transaction between the two nominals by using “Something else not on the list”.

The Tax Summary report is there more for a bit of guidance of the position of the company. We could include this as part of the report (you may wish to start a separate feature request for this), however unlike Corporation Tax and VAT (which are determined at the time of the filing but good to keep an eye on all year around), PAYE does show on the balance sheet when the payroll journal is entered.

I hope this makes sense?


Thanks for the advice Matthew; if only all suppliers were as responsive…!

I’ll have a play with what you suggest, but would really like to see you adding the functionality so it can be done “properly”.

Meanwhile, I agree that the PAYE does show on the balance sheet however it does seem incongruous to me that it should be missing from the Tax report; while the Balance sheet is complete; the tax report is arguably not. There are plenty of other examples in the system where information is reflected in more than one place…

Does anyone else feel this or am I just being pernickety?