{m}.{s}.1The total salaries cost to the employer is £1,102, so this is the amount that must finish up in the expense accounts. This can all be included in the Wages & salaries account, but it is clearer if we open a new account for Employer's NI.
The amount the employer is due to pay to HM Revenue & Customs is £345. This will not be paid immediately, but should be paid over during the next month. In the meantime, HM Revenue & Customs will be a creditor or liability of the business. We will open a new account to record this liability - HM Revenue & Customs - PAYE & NI.
We will now record the salary figures in the T accounts.
Gross | 1000 | Paid to employee | 757 | 757 | ||
Due to HMRC | 243 | } | ||||
345 | ||||||
Employer's NI | 102 | Due to HMRC | 102 | |||
1,102 | 1,102 | 1,102 | ||||
September: The net pay of £757 is paid to the employee. Debit: Wages & Salaries (expense) Credit: Bank (asset) |
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September: The £243 deducted by the employer has become a liability. Debit: Wages & Salaries (expense) Credit: HM Revenue & Customs (liability) At this point we have recorded a total expense of £1,000 and total liability of £243. We must also record the employer's NI. |
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September: The £102 employer's NI must be accured. Debit: Employer's NI (expense) Credit:HM Revenue & Customs (liability) At this point we have recorded a total expense of £1,102 and total liability of £345. |
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During October we pay £345 to HM Revenue & Customs. Debit: HM Revenue & Customs (liability) Credit: Bank (assets) We have now cleared our liability account and paid out in total £1,102 (£757 + £345). This completes our entries relating to the September salary. You will know be asked some questions relating to October. |
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