I have, for the first time, had to pay PAYE, Employers NI and Employees NI to HMRC. No issues with making payment but am struggling when trying to tag the payment in the bank account. The only option I can see that “sort of” fits is PAYE to HMRC. I tagged it. However, Quickfile has posted all the payment against the PAYE nominal account.
I assume that I need to post a journal in order to move the NI payments out of the PAYE account into Employers NI and Employees NI nominals, but I’ve not idea how to do it.
I’ve already completed payroll journals for salary payments:
Dr 7001 Directors salaries
Dr 7006 Employer NI
Cr 2210 PAYE
Cr 2211 NI
Cr 7003 Net salaries paid
Just occurred to me that I’ve been able to claim the EA allowance for the first time this tax year, which will have reduced the overall payment to HMRC.
You don’t need to separate the tax and NI on the balance sheet, just put everything you owe to HMRC into 2210 (tax plus NI) in the journal.
I’d also recommend you switch “post net wages to balance sheet only” to ON in your account settings, and put the net wages in the payroll journal to the balance sheet Net Wages code (I’m on my phone so can’t check exactly which code that is). 7003 is only really useful if you’re not doing payroll journals at all.
EA allowance is not available to all employers, your PAYE software should take into account if EA is applicable to give you figures for payrun period liability.
If its not been accounted for then
Dr PAYE
Cr Employer NI
with allowance amount
Yep, I’ve already got the “post net wages to balance sheet only” set as ON. Sorry, it was a finger fail on my part, I do post to Net Wages code (2220) not (7003) as I stated.
An interesting point you’ve made about not splitting the (tax) to 2210 and the (NI) to 2211 but merely using 2211 to cover both amounts. I followed the knowledge base journal of “how and where” to post for a payroll journal. The example provided clearly split tax and NI. However, when I copied the example and tagged payment to HMRC as PAYE, it posted the full amount to 2210. It makes we wonder why is there a 2211 for NI, if there is no way of bank tagging splitting the amount across 2210 and 2211.
Pay-as-you-earn covers both tax and class 1 NI, as well as other things like student loan repayments, and to my mind all of these should form part of the PAYE liability on your balance sheet until you pay HMRC. I was also thrown at first by the separate NI code 2211 in the chart of accounts but I guess that’s intended for class 1A contributions (which are paid separately, not as part of the PAYE monthly cycle).
I think I now understand what happened. As this was the first time our company was eligible to claim EA allowance, October’s payroll had been calculated before the allowance was claimed. These were the figures that I used in the payroll journal. I incorrectly assumed that the allowance would be available from November’s payroll at the earliest. However, the payroll software has now accounted for EA allowance and reduced the overall payment due to HMRC However, I did not adjust the journal to reflect this!
May I ask another question. In your helpful earlier response you gave an example of a payroll journal. I’ve noticed that you chose to use 2210 (PAYE) to cover PAYE and employee NI payments. Why is there a 2211(NI) ledger and in what circumstances would that be used? I have also noted that in the knowledge base for “payroll journals” both 2210(PAYE) and 2211 (Employer and Employee NI) is used.
PAYE and employee and Employer NI payments are all liabilities to be paid to HMRc hence 2210 used as one place in balance sheet to record and settle liability