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How to write off balance on Net Pay account

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Hi, we have made an error and paid employee more that we should. It is only a small amount and it was decided not to deduct any more from employees pay. However, this amount is now sitting in Net pay account on the Balance sheet. What is the best way to write this off? i think i will need to create another account on our system as can not see anything appropriate at the moment. Thank you

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By Truthsayer
12th May 2020 12:47

If you write it off, you still have to pay PAYE/NI on the amount, and if you don't collect it from the employee that PAYE/NI is itself a taxable benefit. Which nominal ledger account to use in unimportant, so use your judgement.

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By NatBee
12th May 2020 13:29

thank you for your reply, i havent considered the PAYE/NI liability.

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Hallerud at Easter
By DJKL
12th May 2020 12:55

How small is small.

If pennies small then

Dr Wages
Cr Net Pay

If a bit more process a gross bonus covering it next month re that employee and then deduct the previous overpayment from the net pay.

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By NatBee
12th May 2020 13:28

it is around £160, so would you suggest to gross this up and the deduct overpayment from net pay? how do i do this? thank you

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By tom123
12th May 2020 13:31

Why would you not ask for that back?
Most employees would accept that - albeit begrudgingly.

When you are next running your payroll: View your normal payslip.
Then, add estimated amounts until the net pay rises by £160.

At a rough guess, add £250 and see where it gets you.

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By NatBee
12th May 2020 13:55

it was an error due to furlough calculation and it was agreed that it is best to let this go and not upset employee further. thank you

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By Matrix
12th May 2020 15:35

Was the £160 reclaimed under JRS or not?

I would add it to the May payroll. It is up the employer if they gross it up or not.

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By [email protected]
14th May 2020 10:15

Ha - Employees never like it when they have to give back an overpayment!
It's funny how they stay quiet when overpaid, but raise the roof if they've been underpaid...

You need to adjust the employees salary to reflect the payment
Either:
Gross it up and add it to next month, and deduct the net. (if you really don't mind giving £160 away!) word of caution - other employees will be upset about their colleague "getting away with it"
or
Deduct the net so that you get the overpayment back

You could do this to the current pay period by re-opening and re doing the RTI Submission

Journal is as per any other salaries and wages

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By the_fishmonger
14th May 2020 16:20

peter-AT-pschapman.plus.com wrote:

Ha - Employees never like it when they have to give back an overpayment!
It's funny how they stay quiet when overpaid, but raise the roof if they've been underpaid...

A client used to say "them same buggers can't add up fuh toffee, n' play stupid too bloody well but, they seemta sense ha'penny short int pay faster than fost pint guz darn of a Thosday night"

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By petersaxton
14th May 2020 17:24

"other employees will be upset about their colleague "getting away with it" "
maybe give all the employees an extra £160!?

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By Brend201
14th May 2020 14:35

Completely irrelevant to the question being asked but it brings to mind my favourite case of employee overpayment.

I worked in a firm where we did the executive payroll for a large retail business. Paid 4-weekly. Client employee got a pay increase. My colleague inadvertently divided the increase by 12 instead of 13 which led to the employee getting more than he should have got for a couple of months.

When it was discovered (not, of course, by the employee), the employee reportedly went bananas and rejected absolutely the notion that he might return the overpayment to his employer. He even resisted the pay reduction to the correct figure (although the company overruled that). My conscientious colleague was distraught and my employer ended up footing the bill.

Several years later, having moved to another job, imagine my schadenfreude when I opened the newspaper to find that the employee had pleaded guilty to carrying out a fraud (unrelated to the overpayment) on the employer and had received a four year jail sentence.

Apologies for going off-topic.

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