SMP journals

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SS83
SS83 Registered Posts: 9 Regular contributor ⭐
in General accounting discussion
Good morning everyone :)

I am after a quick bit of advice on my salary journals when a client is reclaiming SMP from HMRC

The gross salary is £9,439.98 (£4,699.34 of which is SMP) so I have put through the following journals;

Dr Gross directors salary £9,439.98
Dr Directors employers NI £240.67
Cr PAYE liability £442.87
Cr net wages £9,237.78

I need to reflect that £4,699.34 is due back to the compamny in the form of SMP so I was thinking I need to Dr this to the PAYE liability account to offset against the £442.87 PAYE payable, however where do I put the £4,699.34 Cr?? I assume this needs to go to the P&L so do I reduce the gross salary?

Thanks!

Sarah

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  • Rozzi Rainbow
    Rozzi Rainbow Registered Posts: 465 Dedicated contributor 🦉
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    Hi Sarah

    Yes, just reduce the gross salary. The balance remaining will be the actual cost to the company. If you are using Sage (or other software) you may have an "SMP reclaimed" nominal code which you can use, but the overall effect on the P&L will be the same as this nominal just gets grouped in with wages.

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