Forum

• # 99298
• Mon 28 Apr 2014 10:03 AM

I am just getting to the stage of entering the Employment Allowance in Clients books and can find, nowehere, any advice on how to treat the government gift in the accounts.  One solution, I guess, would be not to record the ENI not paid at all.  Or should the allowance be treated as a journal to Miscellaneous Income.  Alternatively, should I set up a new nominal account (2213) to show the receipt of the Allowance in the P&L.  Not sure that the intention of the Allowance was to inflate profit this way and thus be subject to Tax?  Sorry if this seems a bit basic but no-one seems to have raised this and HMRC guidance doesn't go that far-I'm probably overcomplicating it, as I usually do!!!

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• # 99300
• Mon 28 Apr 2014 10:26 AM

Hello Chalkie,

The way I have done it is that when an employee is paid I do the following;

Dr Expenses->Tax NI
Cr Liability->HMRC

Then to reclaim the Employer Allowance I use a journal entry to;

Dr Liability->HMRC
Cr Expenses->Tax NI

This allows you to keep a record of what is happening, and is the way HMRC
seem to have implemented it in their PAYE Tool. That is to say when you
work out the pay for an employee they will show the employers NI liability
and then when you work out how much you owe HMRC for the month they give
you a refund/allowance.

Hope this helps
Torben
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• # 99301
• Mon 28 Apr 2014 11:07 AM

Thanks for the reply, Torben.

I think you are right that the full ENI and the fact that you have had a refund needs recording.  I think I will go the route of a new nominal code (2213) and then this will give an audit trail each time, such that when the full £2000 has been calimed you know.

Regards,

Chalkie

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• # 99302
• Mon 28 Apr 2014 02:07 PM

Thanks Torben

I have just been working this out on how to acheive the correct resuts in Sage then came across your answer and YIPPEE I have done it like you - then double checked with our accountant who is a happy bunny

Lisa

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• # 99451
• Wed 07 May 2014 02:25 PM

Thank you for raising this, I too have been debating how best to handle this.

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