Double entry treatment - Healthcare

Best practice treatment for healthcare via payroll

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Please could someone share best practice for salary journal when Bupa is provided.  Company pay for all staff to have Bupa, this goes through payroll for correct tax/NI treatment at source.  Bupa DD is currently Cr bank, Dr Healthcare creditor.  Any employee wishing to include family on policy gets taken out of their salary. Getting in a pickle & would love someone to help.

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By accountaholic
11th Jun 2024 13:31

when you say the BUPA goes through payroll do you mean as a payrolled benefit-in-kind?
Assuming that's the case then I would say:
Step 1 - you need to account for the expense of providing the healthcare, so that needs to be DR healthcare costs (P & L), CR healthcare creditor (to net off with the bank DD).
Step 2 - for people paying extra for family cover, the deduction in payroll should post as a CR to healthcare creditor to offset the increased BUPA DD as a result of adding the enhanced cover.

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Replying to accountaholic:
11th Jun 2024 13:55

thank you. So as an example, an employee's cost of bupa to the company is £100, they pay £50 extra for family cover. The DD has gone out for the £150 (cr cash, dr healthcare creditor), the reduction to the employees salary is £50.
so I then do -
For the actual cost to the business - Dr healthcare P&L £100, Cr healthcare creditor £100
For the family cover - Cr healthcare creditor £50, Dr???

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Replying to TTJR:
By stepurhan
11th Jun 2024 14:11

Wages because the £50 has been deducted from the employee's wages. Where the actual entry goes depends on how the rest of the payroll has been entered. It's either an increase of the cost, because the cost recorded is net of the deduction, or a reduction of the wages creditor, because £50 is going to be paid out to the healthcare provider, not the employee.

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