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Maternity Pay

Maternity pay double entry

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Hello,

Would be very grateful if you can help me with the below please:

I am doing bookkeeping for a client, he has only one female staff and he pays her around £700 a month. In Nov 20 the lady went on maternity leave. HMRC paid the employer e.g. £2000 for maternity pay.

Now where does this £2000 feature in the trial balance?

Option 1

DR Bank 
CR PAYE Liability 

Then when paying the monthly wages

CR Bank 

DR PAYE Liability 

But the above will not show the wages in the P&L?

Option 2

DR Bank

CR Wages P&L 

This will reduce the Wages expense at the end of the year and it will not show the true wages expenses the company paid.

So how do you think I should record the HMRC payment received and the monthly wages payments?

Many thanks in advance 

 

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By rmillaree
08th Oct 2021 14:11

yes to this bit

DR Bank
CR PAYE Liability

Then when paying the monthly wages
for wage payment
cr Bank
dr Wages P&L

plus each month
dr paye
cr "statutory pay funding profit and loss" <

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Replying to rmillaree:
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By [email protected]
08th Oct 2021 14:16

Many thanks for your reply. Very helpful.

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