How the integration with payroll worksOnce set up, we create a journal every time you complete a pay run in Payroll. The journal is always recorded using the default categories set up in Accounting. If you want to record the journal using your own categories, then you may need to continue creating the journal manually. You may need to do this if you want to run more detailed reporting, or you want to use a different set of categories. Nominal codes do not need to be the same as those listed below, you can create your own, as long as the category is correct.
Set up the integration with Payroll - From More, select Apps & Connections.
- Select Sage Payroll.
- Select Enable Journals from Payroll.
- Choose the Default Payroll Bank Account.
- Choose whether to record your net wages as bank payment or as a liability.
- Select Save to enable the integration settings.
 NOTE: If you want to change your Payroll Integration settings, follow steps 1 and 2, and make your changes.
Record net wages as a bank paymentSave time by recording this bank payment automatically when you complete your pay run in Payroll. Use this when you pay your employees from the same bank account. Also use this when you're happy to show this as a single payment, rather than individual amounts to your employees. - Just select Post employee net wages to the default bank account. Then choose the bank the payment will come out of
- When you choose Record Payment / EPS from the Summary page in Payroll, the corresponding bank payment creates in Accounting
If you use bank feedsRemember that the bank payment will also import from your bank. To make sure you don't duplicate this payment, make sure you delete it from your bank feeds import. To discard a transaction, just select the cross to the left of the transaction.
Record net wages as a liabilityIf you don't want to automatically record the bank payment, we record your total net wages against the 2250 - Net Wages category. Just choose Post employee net wages to liability account. You will also need to: - Enter a bank payment to show when you have paid your employees
- Enter a bank payment to show when you have paid HMRC
Once you've paid your employees, you'll need to make sure you record the corresponding bank payment. This will make sure you've correctly shown your wages as 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 select Money Out.
- Choose Other Payment then enter the date for the payment. This should be the same as 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:
- For category list, choose 2250 - Net Wages
- Choose No VAT for the VAT rate
- Enter the amount you paid the employee
If you're entering separate lines for individual employees, check that the total matches your net wages for the pay period. When you pay HMRC, make sure you record the payment in your accounts. Make sure you record the payment against the correct categories. This is to ensure your accounts are accurate. Whichever way you create the payment, you'll need to record it against various categories. This will depend on the breakdown of your liability to HMRC. - From Banking, open the required bank account.
- Choose New Entry, then select Money Out.
- Choose Other Payment then 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 HMRC | No VAT | | 2220 - NIC to pay to HMRC | No VAT | | Student Loan | No VAT | If there is a negative amount, you're due to pay on your P32 in this period, you can either: - Adjust your P32, which moves the credit into the next P32 period. This can only happen in Quarters 1, 2 and 3 of the tax year (before month 12 of your tax year)
- Request a refund from HMRC, if you're doing this in Quarter 4 of your tax year. Check that your bank details are valid and up to date with HMRC before requesting this refund
HMRC reserves the right to refuse a refund, if they have reason to believe a refund is not due to you or your business.
How payroll details are recorded in your accounts When you record details of your payroll, the money you owe your employees in wages and the money you owe HMRC records as a liability on your balance sheet. This is to show that this is money owing by your business. These are all entered as a Credit in your payroll journal The other half of the payroll journal records the costs to your business and appears on your profit and loss. These are all entered as a Debit value. Your liability is then cleared when you record bank payment to pay your employees and HMRC. When you complete your pay run in Payroll, we created the following journal in your accounts. | Code | Category | Description | Debit | Credit | | Bank account specified in the | | Total value of your net wages. | | Credit | | 2210 | PAYE to pay to HMRC | The total tax deducted. If you’re due a tax refund, this gets recorded as a debit and included in the credit for net wages. | | Credit | | 2220 | NIC to pay to HMRC | The total of employee and employer NI contributions. If you’re due an NI refund, the value posts as a debit and included in the credit for net wages. | | Credit | | 2230 | Student Loan | The total value of student loan deductions made. | | Credit | | 2240 | Attachments | The total value of attachments deducted from employees’ net pay. | | Credit | | 2250 | Net Wages | The total value of the employees take home pay. | | Credit | | 2250 | Net Wages | When you create the bank payment, this debits the Net Wages category for the same value as the credit. This is to show that you've paid your wages. | Debit | | | 2260 | Pension | The total employee and employer pension contributions. If you use more than one pension scheme, separate entries show for each scheme. | | 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 | | If you've chosen to record the bank payment (Post employee net wages to the default bank account), when you choose Record Payment / EPS from the Summary page in Payroll, we will also record the details of the payment you need to make to HMRC. If you’re due a refund from HMRC in the period, you can choose to either take the refund or postpone it. Select: - P32 Adjustment. To move the credit to the next P32 period to offset liability. This option isn't available if you are in the twelfth month or the fourth quarter of a tax year. Or
- Refund. Enter your bank details and submit the request to HMRC. Your bank details will update at HMRC, so be sure they are correct before submitting your request
| Category code | Category | Description | Debit | Credit | | Bank Account | | Total owed to HMRC and should agree to the value on your P32. If you’re due a refund from HMRC, this posts as a debit. | | Credit | | 2210 | PAYE to pay to HMRC | Total Income tax. | Debit | | | 2220 | NIC to pay to HMRC | If you’re entitled to employment allowance or have statutory payments to recover, this is offset against this value and reduces your liability to HMRC. | Debit | | | 7020 | Employers NI | The amount of employment allowance you can reclaim, if applicable.
If you’re entitled to claim employment allowance, this is offset against your employer’s NI contribution account as a credit. | | Credit | | 7070 | Statutory Maternity Pay | The total SMP reclaimed. | | Credit | | 7080 | Statutory Paternity Pay | The total SPP reclaimed. | | Credit | | 7090 | Statutory Adoption Pay | The total SAP reclaimed. | | Credit | To help you keep track of your pension payments, record the payment of your pension when you complete your pay run, and we'll enter the following transactions to clear your liabilities. | Category | Description | Debit | Credit | | 2260 - Pension
| Total amount paid to the pension provider. | Debit | | | Bank account | Total paid to the pension provider. | | Credit | [BCB:299:UKI - Personal content block - Dane:ECB][BCB:300:UKI - Search override - Start UK:ECB][BCB:276:UKI - hide back button:ECB]
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