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Account for Job Retention Scheme income in Sage 50 Accounts

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Summary

Under the Coronavirus Job Retention Scheme (CJRS), all UK employers could access support to pay part of their employees' salary for those employees that would otherwise have been laid off during this crisis. Here we explain how to process CJRS claims and reimbursements in Sage 50 Accounts.

Description

If you have Sage 50 Payroll, you can also find out more about processing your payroll under the scheme in our Sage 50 Payroll Coronavirus Job Retention Scheme guide.

Resolution

How the scheme works

If you're an employer who had staff who were unable to work due to the coronavirus and have asked your employees to stop working, but you haven't made them redundant, then you can apply to HMRC to help pay their salaries under the Coronavirus Job Retention Scheme (CJRS) - also known as the Furlough scheme.

In the March 2021 Budget, the Government announced that the scheme has been extended until the end of September 2021. Read more >  

The deadline for final claims under the scheme was14 October 2021.

You can find out more about the scheme in our Job Retention Scheme FAQs guide.

Create new nominal codes to record grants

We recommend you create the following new nominal codes to record when you make Job Retention Scheme claims and when grants are received, unless otherwise advised by your accountant. This will help you when reconciling any grant income received.

Nominal CodeNameManagement reportCategory
1150 or next available codeJob Retention Scheme Accrued IncomeBalance SheetDebtors
4950 or next available codeJob Retention Scheme Grant ReceivedProfit and LossOther Sales
  1. On the navigation bar click Nominal codes then click New/edit.
  2. Complete the Nominal Record window as follows:
    N/C
    		Enter the nominal code number you want to create, for example, 1150.
    Name
    		Enter the name of the account, for example, Job Retention Scheme Accrued Income.
  3. Click Save then click Close.
  4. Repeat this process to create the second nominal code.

TIP: If not already included, you must add your new nominal codes to your existing chart of accounts. If preferred, you can show coronavirus grants as a separate category on your profit and loss.

Record grants claimed

NOTE: There's no change to how you record your payroll postings in Sage 50 Accounts. You should continue to run your Nominal Link or post salary journals as normal.

You should record each claim you make as a journal entry, to post a debit for accrued income on the balance sheet under Debtors, and a credit on the profit and loss under Other Sales.

For the purposes of this section we'll use the following example:

  • The company makes a claim for £12,500 on 10 April 2020.
  • No grant has yet been received.
  • In this example, we're using the non-vatable tax code, T9.*

  1. On the navigation bar click Nominal codes then click Journal entry.
  2. In Reference, enter a reference, then in Posting Date enter the date of the claim.
  3. Enter the following information to record the accrued income:
    N/CNameDetailsT/CDebitCredit
    1150Job Retention Scheme Accrued IncomeJob Retention Scheme claimT912500.00
    4950Job Retention Scheme grant receivedJob Retention Scheme claimT9
    		12500.00
  4. Click Save then click Close.

Record grants received

You should record grants received as a bank receipt to the Job Retention Scheme Accrued Income nominal code. This increases your bank account balance and reduces the accrued income balance.

For the purposes of this section we'll use the following example:

  • A government grant for £12,500 is received on 20 April 2020.
  • The grant is received into the company current account, nominal code 1200.
  • In this example, we're using the non-vatable tax code, T9.*

  1. Click Bank accounts, click Receipts then click Bank receipt.
  2. Complete the Bank receipts window as follows:
    BankDateN/CDetailsNetT/CTax
    120020/04/20201150Job Retention Scheme grant received12500.00T90.00
  3. Click Save then click Close.

NOTE: * For VAT registered businesses, income is vatable if it's within the normal scope of a business or linked to a supply.  Coronavirus related grants are one-off events unrelated to any supply of goods or services. Whilst it's unlikely that any grant income will attract a VAT liability, you should seek specific advice from your accountant to understand if any grant received should be treated as vatable or non-vatable income.  You can find further details on what income is vatable in the HMRC manual. Grant income is likely to be considered income for income or corporation tax purposes.

Additional questions you may have

To help support you, we've put together a handy Coronavirus Job Retention Scheme FAQs guide.

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should call the HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3700, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.