Hi
I am new to payroll journals. Recently the employee has been ill and got SSP as well as the basic pay, should that be reflected in the journal?
At the moment, I’ve included both the basic pay and SSP as gross pay (see below)
I also wonder if an income tax refund should be considered a liability or a profit?
Hello @zaja
This is definitely a question for you accountant I would think.
Its not something the support team can help with unfortunately.
If it helps I did find this thread on a third party forum.
Thanks for finding the forum post. I’ll check also with my accountant then
SSP is not recoverable by the employer, so it is just part of gross pay. However it is very unusual to pay SSP and normal pay for the same period. Usually, if occupational sick pay is paid it tops up SSP to normal pay.
Income tax is not an expense of your business, so a refund is not income.
The cost to your business when you pay staff through PAYE is the total gross wages. Some of that money you give to the employee, some of it you withhold and pay over to HMRC as payment towards the employee’s personal tax bill. This withheld tax sits as a liability on your balance sheet until you pay it over to HMRC.
If an employee is due a tax refund then all that means is that you’re effectively withholding a negative amount for income tax - your P&L still just shows the gross wages as normal, but the net amount you pay the employee is actually more than their gross pay. The difference goes as an asset on your balance sheet, which is offset against other PAYE liabilities or cancelled out if/when HMRC actually pay you a refund.
If the employee is paid on an hourly or weekly rate, say, it wouldn’t be unusual to have SSP and basic pay in the same pay period.
Yes, I meant same period of time, not same pay reference period.
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