One of our weekly paid staff sometimes pays income tax and sometimes receives a small tax refund.
I have looked at your help notes on how to record PAYE and NI contributions which work fine for the employee when tax is deducted.
However, I am not sure the best way to record the wages information when th employee has a tax refund. For example:
Amount paid is £93.05 including £7.80 tax refund.
Basic pay is £85.25.
Tax refund is £7.80.
There is no NI deduction.
I have shown the tax refund as a positive amount as opposed to a negative amount. This is reflected in the balance sheet and shows as a decrease in liabilities.
However, the employee costs only shows £85.25 when in fact it should show £93.05.
Am I missing something?
Yours
Robert
Hi Robert,
Yes you are recording the refund correctly. The PAYE tax paid/received by your employee doesn't count towards your employee costs as this is a personal payment by your employee.
Another way of looking at it: you have given your employee £85.25 and the tax man has given you £7.80 to give to your employee. So the employee received £93.05, but you're only £85.25 worse off.
Cheers,
