Salary journals record wage payments, tax payments to Revenue, and track employee costs for payroll processing. We recommend that you complete your salary journals at the end of each pay period. To make sure your accounts are up to date, we also recommend that you create the following: - A salary journal showing the amounts due for your wages, PAYE, and national insurance. This is so you can accurately track your employee costs
- A bank payment showing the amount paid to your employees. This is so that your bank balance is up to date, and you can reconcile with your bank statement
- A bank payment showing the amount paid to HMRC
Before you start For whatever payroll system you use, you'll need the following information for each pay period. - Total PAYE (income tax)
- Total gross pay
- Total net pay
- Student loans
- Deductions and attachments
- Employee pension contributions
- Employer’s NI contributions
- Employees NI contributions
- Employer pension contributions, if applicable
- Any statutory payments made
- Any statutory payments reclaimed. If you reclaim statutory payments, you can get this value from the monthly P32 report
When creating the salary journal, you'll note payroll details, net wages, and tax/insurance owed to Revenue, recorded as liabilities. We credit these in the payroll journal. The other half of the payroll journal records the costs to your business and reported on the profit and loss. Enter all of these as a Debit value. Your liability clears when you record bank payments to pay your employees and HMRC. - From More, choose Journals, then New Journal.
- Enter the pay date for the relevant pay period.
- Enter a reference and if required a description.
- Enter the relevant amounts as debits and credits as shown in the following table.
- Make sure you clear the include on VAT return checkbox, as this isn't reported on the VAT return.
 NOTE: Be sure to uncheck "Include on VAT return" since it isn't reported on the VAT return.
The following table shows the details of a salary journal: Code | Category Name | Description | Debit | Credit | | 2210 | PAYE | The total tax deducted. | | Credit | | 2220 | NIC to pay to HMRC | The total of employee and employer NI contributions. | | Credit | | 2230 | Student Loan | The total value of student loan deductions made. | | Credit | | 2240 | Attachments | The total value of attachments is deducted from employee’s net pay. | | Credit | | 4900 | Other Income | With an employee having an attachment of earnings order, you can deduct up to £1.00 for administrative costs. | | Credit | | 2250 | Net Wages | The total value of the employees take home pay. | | Credit | | 2260 | Pension | The total employee and employer pension contributions. | | Credit | | 7000 | Employee Wages and Salaries | Total gross wages for all employees, not including statutory payments. | Debit | | | 7020 | Employers NI | The total employer NI contributions. | Debit | | | 7030 | Employer Pensions | Total employer pension contributions. | Debit | | | 7050 | Other Deductions | Total of any remaining employee deductions, excluding attachments and student loans. | | Credit | | 7060 | Statutory Sick Pay | Total SSP paid. | Debit | | | 7070 | Statutory Maternity Pay | Total Statutory Maternity Pay paid. | Debit | | | 7080 | Statutory Paternity Pay | Total SPP paid. | Debit | | | 7090 | Statutory Adoption Pay | Total Statutory Adoption Pay paid. | Debit | | Reclaim statutory payments If you can reclaim any statutory payments such as SMP, SSP or SAP include the following lines: Category Code | Category Name | Description | Debit | Credit | | 7070 | Statutory Maternity Pay | The total Statutory Maternity Pay reclaimed. | | Credit | | 7080 | Statutory Paternity Pay | The total Statutory Paternity Pay reclaimed. | | Credit | | 7090 | Statutory Adoption Pay | The total Statutory Adoption Pay reclaimed. | | Credit | | 2220 | NIC to pay to HMRC | The total of all statutory payments reclaimed this period. | Debit | Reclaim Employment Allowance If you claim an employment allowance, include the following lines: Category Code | Category Name | Description | Debit | Credit | | 2220 | NIC to pay to HMRC | The amount of employment allowance you want to claim. | Debit | | | 7020 | Employers NI | The amount of employment allowance you want to claim. | | Credit | You can record this as a journal or as a bank payment. Record the bank payment for your wages Once you've paid your employees, you'll need to record the corresponding bank payment. This will make sure that you show your wages paid in your reports. Whether you import transactions from a bank feed or create the bank payment manually, make sure you choose the Net Wages category. To make it easier for you to match with your bank statement, consider creating a separate line for each employee. - From Banking, open the required bank account.
- Choose New Entry, then click Money out.
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Select "Other Payment" and enter the payment date, which matches your pay date. - Enter the total amount paid for the pay period.
- Create a single line for the total or create separate lines for each employee with the following details:
From the Category list, choose 2250 - Net Wages.
Choose No VAT for the VAT rate.
Enter the amount paid to the employee. If you're entering separate lines for individual employees, check that the total matches your net wages for the pay period. Record this as a journal To do this, follow the steps in the previous section and add the following information: Category Code | Category Name | Description | Debit | Credit | | Code for your bank account | Bank account | Total net wages. | | Credit | | 2250 | Net Wages | Net Wages | Debit | When you make your monthly or quarterly payment to HMRC, you need to show this in your accounts. This is so you can reconcile the payment in your bank. The amount you owe reduces and show's on your reports. When you create the payment, you'll need to record it against various categories. This depends on the breakdown of your liability to HMRC. - From Banking, open the required bank account.
- Choose New Entry, then select Money Out.
- Enter the date for the payment.
- Enter the amount paid to HMRC.
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Add separate lines for tax, national insurance and any student loan payments, if applicable. Category | VAT rate | | 2210 - PAYE to pay to HMRC | No VAT | | 2220 - NIC to pay to HMRC | No VAT | | 2230 - Student Loan | No VAT | Record this as a journal To do this, you need to create the following journal: Category Code | Category Name | Debit | Credit | | Code used for the bank account | Bank account | | Credit | | 2210 | PAYE to pay to HMRC | Debit | | | 2220 | NIC to pay to HMRC | Debit | | | 2230 | Student Loan | Debit | | If your business makes use of the Employers NI allowance you can include the following two lines. | 7020 | Employers NI | | Credit | | 2220 | NIC to pay to HMRC | Debit | | [BCB:299:UKI - Personal content block - Dane:ECB] [BCB:300:UKI - Search override - Start UK:ECB] [BCB:276:UKI - hide back button:ECB] |