Home For AAT student members AQ 2013 AAT Level 2 (Level 5 in Scotland)

Help needed with Payroll Double Entry Please

mompymompy Just JoinedRegistered Posts: 1
Hi all
Can any one help me with employees & Employers Pension contributions. Having difficulty with the double entry. Anyone have the magical formula - cant find it in my books



  • CullenCullen Experienced Mentor Registered Posts: 592
    Debit Gross Pay Expense, for total wage cost, ( gross pay, employers NIC, employers contribution to pension etc) So all the costs to the employer are debited here.

    In AAT Foundation you are told to use a Wages Control Account, so just learn one side of the journal and the other will always be this account. Therefore the credit side of the above is here.

    The company will owe HMRC the PAYE, the emplyees NIC and the employers NIC. If we owe money to someone they are a CREDITOR. The clue here is in the wording so we credit HMRC all the money we have to pay them. The debit is of course to the wages control account.

    When we pay HMRC we credit the bank/cashbook and the debit is to the HMRC creditor account which will reduce it to nil.

    When you have completed all your posting, by entering all the costs, all the payments, the wages control should be nil. If you are left with a balance in it, try and see if you can see this figure elsewhere. The AAT often leave a balance in the account which may be the employers NIC, and the question may be worded "what do you need to do" so you may want to consider if all the posting to the expense account is complete or does the HMRC creditor account include all the PAYE and both NIC?

    In the real world most Companies do not use a wage control account and just post to net pay, this is what I do as I think a wage control is an unnecessary complication.

    Hope this has helped and not confused you more?
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