We are paying PAYE through direct debit, is there any way tagging this bank transaction to certain period?
Thanks in advance
The “tax payment to HMRC” tagging option just assigns the transaction to the “PAYE” nominal on your balance sheet to pay off whatever liability has accumulated on there for the month or quarter in question - the intention is that the individual pay period calculations would be recorded as journals on each pay day. It’s these payroll journals that specify what amounts pertain to what pay period.
The journal would debit the P&L nominals for gross pay before deductions, employer’s NI and possibly employer’s pension contributions, and credit the balance sheet nominals for net pay, PAYE (both the tax and employee NI deducted from gross pay, and the employer NI on top of the gross pay), and any other liabilities like pensions (again, both the employee deductions and the employer’s contributions). The payment transactions to the employees, HMRC and the pension provider simply offset these liabilities.
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