Payroll information required
You need the total values for the following:
- Total NI contributions. This is made up of both the employer and employee NI contributions
- Employer's NI contributions
- Employer pension contributions, if applicable
NOTE: If you're using Sage 50 Payroll - Payment Summary (Part 1) and Payment Summary (Part 2) reports. The post update P32 report will show Employment allowance, SMP, SPP or SAP Reclaimed, if applicable.
Childcare vouchers salary sacrifice information
Other Salary Sacrifice schemes, including Salary Sacrifice Pensions, follow the same principles.
The maximum amount that any employee can sacrifice is £243 per month or £55 per week.
The following table shows an example of a salary journal with a salary sacrifice:
| Nominal Code | Debit | Credit |
| 7000 - Gross Wages | 2000.00 | |
| 7006 - Employer's NI | 166.78 | |
| 2210 - PAYE | | 250.60 |
| 2211 - National Insurance | | 310.11 |
| 2220 - Net Wages | | 1363.07 |
| 2250 - Childcare Vouchers* | | 243.00 |
The following table shows an example of a salary journal without a salary sacrifice:
| Nominal Code | Debit | Credit |
| 7000 - Gross Wages | 2000.00 | |
| 7006 - Employer's NI | 198.02 | |
| 2210 - PAYE | | 299.20 |
| 2211 - National Insurance | | 368.19 |
| 2220 - Net Wages | | 1530.63 |
| 2250 - Childcare Vouchers* | | |
* There is no default nominal code for childcare vouchers. We recommend that you use a nominal code in the Current Liabilities section of the Chart of Accounts.
How this affects the employer
In the above example, without the salary sacrifice, the total employer liability is £2198.02 but with the salary sacrifice this reduces to £2166.78. This is because the amount of employer's NI is reduced due to the salary sacrifice.
In addition to making the usual bank payments for PAYE, NI and net wages, the employer makes a payment to the company that administers the childcare vouchers. This company then arranges for the vouchers to be issued to the employee or direct to the childcare provider.
How this affects the employee
In the above example, without the salary sacrifice the employee is paid £1530.63. With the salary sacrifice, the employee is paid £1363.07. However, they also receive £243 in vouchers to pay for their childcare so in effect they are paid £1606.07. This is because they are paying less tax and NI due to the salary sacrifice.
Management fees
Childcare voucher companies charge the employer a management fee. This is usually a percentage of the value of the vouchers and is standard rated for VAT.
To record the management fees, post a bank payment to the relevant overhead account using the standard rate tax code, T1 by default.
Nominal codes
If you're using the Sage default nominal structure, you should already have some of the required nominal codes. If these codes don't exist, you may need to create them before proceeding.
View list of nominal codesnull;null;nomcodes In addition to nominal code 7000, the default nominal structure includes nominal codes 7001 to 7005. These are optional codes that you can use to split your gross wages into subcategories. The examples in this article use nominal code 7000 for gross wages for simplicity.
| Nominal code | Name | Report | Report section |
| 2210 | PAYE | Balance Sheet | Current Liabilities |
| 2211 | National Insurance | Balance Sheet | Current Liabilities |
| 2214 | Student Loans | Balance Sheet | Current Liabilities |
| 2215 | Attachments | Balance Sheet | Current Liabilities |
| 2216 | Deductions | Balance Sheet | Current Liabilities* |
| 2217 | Apprenticeship levy | Balance Sheet | Current Liabilities |
| 2220 | Net Wages | Balance Sheet | Current Liabilities |
| 2230 | Pension Fund | Balance Sheet | Current Liabilities |
| 7000 | Gross Wages | Profit and Loss | Overheads |
| 7006 | Employer's NI | Profit and Loss | Overheads |
| 7007 | Employer's Pension | Profit and Loss | Overheads |
| 7011 | SMP Reclaimed | Profit and Loss | Overheads |
| 7012 | SPP Reclaimed | Profit and Loss | Overheads |
| 7013 | SAP Reclaimed | Profit and Loss | Overheads |
| 7015 | Apprenticeship levy | Profit and Loss | Overheads |
*Depending on the reason for the deduction, it may be classed as an overhead.
To create a nominal code:
- Click Nominal codes then click New.
- Complete the Nominal Record window as follows:
| N/C | Enter the number for the nominal code you want to create, for example, 7012. |
| Name | Enter the name for the new nominal code, for example SPP Reclaimed. |
- Click Save then clcik Close.
When you create a new nominal code you must check your Chart of Accounts to ensure this nominal code is included in a Chart of Accounts range.
Post the salary journal
If you're using Sage 50 Accounts Plus or Sage 50 Accounts Professional you can use the Memorise and Recall options to create a skeleton salary journal.
- Click Nominal codes then click Journal entry.
- Enter a reference and the date for the salary journal, then enter the relevant details on the Nominal Ledger Journals window, for example:
The balance for the whole salary journal must equal zero before you can save.
Salary journal example
| N/C | Name | Debit | Credit |
| 7000 | Gross Wages - The total of gross wages for all employees, before employee pension deductions. | Debit | |
| 7006 | Employers NI - The total employer NI contributions. | Debit | |
| 2210 | PAYE - The total PAYE deducted. | | Credit |
| If you receive a tax rebate, the value should be posted to this nominal code as a debit and net wages credited. |
| 2211 | National Insurance - The total employer and employee NI contributions. | | Credit |
| If you receive an employee or employer NI rebate, the value should be posted to this nominal code as a debit and net wages credited. |
| 2214 | Student Loans - If applicable, the total of student loan deductions made. | | Credit |
| 2215 | Attachments - If applicable, the total of attachments deducted from employees net pay. | | Credit |
| 2216 | Deductions - If applicable, the total of remaining employee deductions, excluding attachments, and student loans. | | Credit |
| 2220 | Net Wages - Total net wages, that is the total of employees' take home pay. | | Credit |
Pensions
If your payroll includes pensions you need to post the following two entries:
| 2230 | Pension Fund - Total employer and employee pension contributions. | | Credit |
| 7007 | Employers Pensions - Total employer pension contributions. | Debit | |
The employee contribution is accounted for in gross wages - 7000.
SMP, SPP and SAP reclaimed
If your payroll includes SMP, SPP or SAP Reclaimed you need to post the following entries:
| 7011 | SMP Reclaimed - Total SMP Reclaimed. | | Credit |
| 7012 | SPP Reclaimed - Total SPP reclaimed. | | Credit |
| 7013 | SAP Reclaimed - Total SAP reclaimed. | | Credit |
| 2211 | National Insurance - Total SMP/SPP reclaimed. | Debit | |
Employment allowance
| 7006 | Employers NI - Reducing the Employers NI with the amount of employment allowance claim . | | Credit |
| 2211 | National Insurance - Reducing the National Insurance liability with the amount of employment allowance claim. | Debit | |
Apprenticeship levy
If your payroll needs to account for apprenticeship levy:
| 7015 | Apprenticeship levy - Increasing an expense code with the apprenticeship levy amount. This is the levy liability value on your P32. | Debit | |
| 2217 | Apprenticeship levy - Increasing the apprenticeship levy liability by the amount due. This is the levy liability value on your P32. | | Credit |
Childcare vouchers
If your payroll includes a salary sacrifice for childcare vouchers, post the following entry and adjust the values posted to Net Wages, PAYE, NI and Employers NI accordingly:
| 2250 | Childcare Vouchers - For further information about salary sacrifice, please refer to the section above, Information > Childcare vouchers salary sacrifice information. | | Credit |
- Click Save then click Close.
Post bank payments to clear the liabilities
In this example, we are posting a bank payment for your employees' net wages.
When you post the journal, a liability is created on certain nominal codes. You'll then post any required bank payments to represent the money you have paid out, to clear the liability and affect your bank balance correctly.
- Click Bank accounts then click the Payments drop-down and click Bank payment.
- Enter the relevant details on the Bank Payments window, for example:
| Bank | Date | N/C | Details | Net | T/C | Tax |
| Bank nominal code | Transaction date | Net wages, for example 2220 | Wages | Net wages value | T9 | 0.00 |
The bank payments should always use the non-vatable tax code, T9 by default. This ensures that they do not appear on your VAT Return. - Click Save then click Close.
When required, repeat this procedure to post bank payments for PAYE, NI, attachments, pensions and student loans.
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