Help with Wages

[Allen0805]

Hello,

As a new employer i was unsure about how much tax and NI to deduct from my employees so what i did for the first month was paid them there gross amount and told them that i would make deductions over the following months.

I now use the employer CD ROM supplied from HMRC so will have no more issues like this. Can someone please give me advise on which is the best way to deduct the tax and NI for there wages.

Also, when accounting for the first set of wages how would i enter these in sage.

Any help would be great.

Thanks

 

[mr. mischief]

First, get their PAYE codes and all the other data your HMRC system needs for each employee. This will be on the P45 if available. You then file the P45 online to HMRC.

If any have no P45, you need to submit a P46 and file it online. There are 3 options on the P46 - take great care over how you answer!

The best code to have is 647L and applies if this is someone's sole or main job - it allocates their full ration of year-to-date tax-free allowances.

An M1 code applies where not enough info is known, it will not give them their full allocation of tax-free allowances if they've had employment breaks since 6 April 2010.

BR applies if this is their second job, where their tax-free allowances are already in place at job 1 so they can't have them again at your place.

I'm explaining all this because so many tax codes are wrong in this country right now, and a lot of this starts with P46s not being done carefully.

You then process their start date and first month of pay, filling in the gross and the system does the rest. Then once you are happy with that, you can move on to month 2.

Somewhere in the menu you should find p32 form. This tells how much PAYE and NI is due by month. If it is over 1,500 you need to pay this every month by 19th of following month.

If under 1,500 you need to pay quarterly, the next one being due on 19 October.

The HMRC system is poor for me. It often has big glitches which only become apparent in April when it's too late. It doesn't give useful information for posting payroll entries into the books.

 

[Tom McClelland]

Several suppliers offer free payroll software that most users consider better than the HMRC CDROM.

At a tiny additional cost (in the context of the cost of employing people) you can get things like payslips for the employees, telephone support, and so on. The exact deals vary from supplier to supplier.

 

[Figurate]

In reply to the entries into Sage:
Put them in as a journal (which, assuming straightforward pay, would be as below)

Dr Gross Pay (normally a code like 7000 Gross Wages, but may be 6000 or similar)
Dr Employers NI (code 7006)
Cr Net Wages (Code 2220)
Cr PAYE (Code 2210)
Cr NI (employer & employee) (code 2211)

(Sage help file gives more detail if you have reclaims, SMP, SSP, SPP etc.)

The journal should balance to zero.

Thanks
Louise