How to Record Wages including PAYE and NI Contributions

Note: this information refers to PAYE and NI contributions by employees. (If you are self-employed or in a partnership and pay your personal tax from a business account, record this as a Non-Business Payment).

Pay-As-You-Earn (PAYE) and National Insurance (NI) contributions are one of the more complicated accounting procedures self-employed people have to perform.

Consider an employee who receives a monthly salary of £1,700.
HM Revenue and Customs will collect 3 types of 'tax' on this salary:

  1. Pay-As-You-Earn Tax
  2. Employee's National Insurance Contributions
  3. Employer's National Insurance Contributions.

Let's assume the employee's PAYE is £250, Employee's NI is £145, and Employer's NI is £170. (For information on how to calculate these figures, see

To record the salary payment, click menu File > New > Money Paid Out. The Money Paid Out window will be shown:

Salary Payment

Note: The 'Income Tax and NI Liability' amount is negative. Also, the VAT Treatment (under 'More Options') should be set to Out of Scope

Enter the details of the salary into the following fields: