Employement Allowance Accounting and Tax treatment

Didn't find your answer?

Hello lovely people. 

I've got a new client recently and I am in the process of rectifying his accounts. 

I will go to the main point straight away, and it might seem like a silly one but id like to be sure.

One of the issues I found is that he doesn't owe HMRC any money regarding PAYE. however on the accounts there is an outstanding amount, after checking, it seems like the employement allowance han't been recorded before although he was getting it. 

so I just want to double check the accounting and tax treatement  with you guys especially that it hasn't been done by the other accountant before. 

when recroding the Employer NIC, let's assume £126 as an expense we have to add a credit for the same amount as income, that will have a nill effect but it would be more accurate than just ignoring it right ? 

Replies (6)

Please login or register to join the discussion.

avatar
By Bobbo
11th Apr 2024 16:45

What do you mean by "just ignoring it"?

I put the credit against the Employer NIC expense, rather than recording as income.

Are you happy the Employment Allowance was correctly claimed? If an incorrect claim could be why former accountant left it as a creditor.

Thanks (2)
Replying to Bobbo:
avatar
By T B
11th Apr 2024 17:00

What do you mean by a credit.
Well, in regards to the allowance I’ve spoken to the accountant and he didn’t know, and it is a small business and eligible

Thanks (0)
Replying to T B:
avatar
By Leywood
11th Apr 2024 17:37

T B wrote:

What do you mean by a credit.

The opposite of a debit.

Are you having a blond moment?

Thanks (2)
Replying to Leywood:
avatar
By T B
11th Apr 2024 20:09

Ahah, I might just had honestly

Thanks (0)
Replying to T B:
RLI
By lionofludesch
11th Apr 2024 19:52

T B wrote:

What do you mean by a credit.

Side furthest away from the window.

Thanks (0)
avatar
By Paul Crowley
11th Apr 2024 17:04

This is bookkeeping stuff
Prior accountant submitted accounts showing ERNIC as outstanding? For the full year?

Thanks (0)