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How to Record an Annual Tax Liability

Note: This text refers to Corporation Tax and Self-Assesment Income Tax. For PAYE and NI contributions made by employees, click here.

To record your annual tax liability, click menu File > New > General Transaction:

Tax Liability

(Note: For Corporation Tax, the From Account should be 'Corporation Tax Liability').

Enter the details of your tax liability into the following fields:

  • Journal Memo: A description of the transaction for your records, e.g. 'Self-Assessment Tax Liability'.

  • Date: Enter the last day of the financial year for which the tax expense is calculated.

  • From Account:The account used to track how much money is owed to HM Revenue and Customs. If the business is a company this should be 'Corporation Tax Liability'. For self-employed individuals or partnerships this should be 'Self-Assessment Tax Liability'.

  • To Account: The expense account, usually 'Tax Expense'.

  • Amount: The amount of the tax liability for the year.

Once you've entered the tax liability details, click OK to save it. The new transaction will appear in the Transactions list (menu Window > Transactions).

When you come to paying the tax liability to HM Revenue and Customs, you must enter another transaction to record the payment. Click File > New > Money Paid Out:

Tax Payment

Enter the same details as for an expense, except allocate to the tax liability account you used in the previous transaction. If you are registered for VAT, the VAT Treatment field should be set to 'Out of Scope'.

Click OK to save the payment. The new transaction will appear in the Transactions list (menu Window > Transactions).