{m}.{s}.1Summary

  • Employees receive their pay after the deduction of income tax (PAYE) and national insurance (unless they are below the tax and NI thresholds).
  • In addition, the employer must pay employer's NI.
  • Deductions and employer's NI for one month are due to be paid to HM Revenue & Customs during the following month.

{m}.{s}.2Accounting for wages and salaries

There are several different ways of accounting for wages. It is clearest to make three entries:

  1. Payment of net wage
    • Debit: Wages & salaries (expense)
    • Credit: Bank
  2. Record employees' deductions
    • Debit: Wages & salaries (expense)
    • Credit: HM Revenue & Customs
  3. Record employer's NI
    • Debit: Employer's NI (expense)
    • Credit: HM Revenue & Customs

{m}.{s}.3Wages control account

Wages control accounts will usually be maintained in integrated computer systems.

Wages control account
Net Pay Paid XX Net Pay Calculated XX
       
       
      

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