This process also puts PAYE as liability, as it should, correct. However, upon checking my PAYE hmrc online, i am in credit. I will never know how long or when it was in credit…
How would i clear this PAYE liability entry? Put HMRC as a Supplier, and is there a credit facility or?
I will be calling them to get this refunded to my bank soon.
thanks but it is not a simple one… may have been in credit from years ago… anyways of doing this without having to go back in time… it will just be difficult.
It depends how you were recognising payroll payments in the past, really. If you were posting payments to HMRC directly to the P&L account on payment, then debit PAYE liability and credit staff costs in the P&L. Then if you receive the refund, just tag it to the PAYE liability account. If you don’t receive the refund, and it’s just left there to offset against future payments, then the PAYE liability account will show what you actually owe. Don’t pay anything while it’s still in credit. If you were posting the liability to the balance sheet, it should show the credit anyway. If you do the journal above, presumably your bank account will not be correct? You don’t set up HMRC as a supplier.
You should also be able to track back in your online PAYE account and see when the credit arose.
Include deductions etc…
When I use the above to process the payrol journal, it puts the paye costs in the creditors as it should…. Then you’re suppose to tag the payment to HMRC when you pay it. But this instance, it will be left on there as if I still owe it but in fact I’m in credit ….
And yes, I can’t using bank because it will not total up or correspond to the actual bank.
It is because the refund are payment(s) that were paid out as an expense previously but now that it is being refunded, it will act as a credit in the PAYE. So when there is the next time we have a PAYE liability, it will just come off from that balance and not act as an expense again.
Do a journal for the credit amount
Dr PAYE
CR Gross salaries
(this will reverse over stated exp from last year and reduce liability)
Run your payroll as normal and new paye will get offset by credit automatically
For example Salaries, Employer’s NIC - these are staff costs. If you are running a payroll, then the expense shows up in your P&L as Salaries and Employer’s NI. If there is no NI to pay, then it will just be salaries. If in the past you have been tagging payments to HMRC as salaries, then this is where you need to put the credit.