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Recognition of employment allowance in SPL

What's the best way to recognise employment allowance in the SPL?

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Disagreement in the office - one says that HMRC's employment allowance for NICs should be recognised within income, whereas another says it should be recognised as a reduction to the Employer NIC expense within administration expenses.

 

Can anyone please confirm either way with supporting evidence/FRSs?

Replies (15)

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By Accountant A
26th Sep 2019 16:04

Scottish Premier League??

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By Wanderer
26th Sep 2019 16:31

I'd go for a reduction of the expense on the basis that it isn't an income item, it's a factor taken into account in working out a cost, similar to Small Business Rate relief.

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By Tim Vane
26th Sep 2019 16:31

Superior Parietal Lobe?

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By GW
26th Sep 2019 17:00

I agree with wanderer.

S4 NICA 2014 refers to deductions from NIC payments and refunds, so the employment allowance is the reduction of an expense rather than income.

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RLI
By lionofludesch
26th Sep 2019 18:11

I vote reduce wages.

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By Payrollgal
27th Sep 2019 08:41

It's not income, it's a reduction to wages.

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By elliebhall023
27th Sep 2019 10:23

Thank you to those that responded, I did think it should be a reduction to wages.

To those confused by the SPL reference, it's Statement of Profit or Loss in new money, apologies for the confusion!

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Replying to elliebhall023:
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By Accountant A
27th Sep 2019 13:52

elliebhall023 wrote:

To those confused by the SPL reference, it's Statement of Profit or Loss in new money, apologies for the confusion!

New one on me! I'm getting old!!

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Replying to Accountant A:
By Charlie Carne
02nd Oct 2019 11:43

You're not the only one. This isn't a standard acronym (or, strictly, an initialisation). I find that people are increasingly using initials or other abbreviations (perhaps as an extension of the awful text-speak "LOL"- euch!!) instead of saying what they mean in clear, intelligible English. When I was training at BPP many years ago, our audit lecturer would often comment on the appalling nature of the English used in some students' written answers, for the very good reason that, as professionals, we should communicate clearly.

On a slightly different, though related, subject, since when did "Ltd" (the simple, English abbreviation of the word "Limited") get written as "LTD" next to lower case company names, as though it were an initialisation? "MY COMPANY LTD" is fine, but "My Company LTD" is an abomination! Even worse is the expression "my client formed an LTD" - what does that mean? They can form an LLP, as that is an initialisation, but LTD is not.

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Replying to charliecarne:
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By elliebhall023
02nd Oct 2019 21:33

This is a standard acronym; just because you are not familiar with it, does not mean I am using 'text speak' in a professional conversation. BPP are the training provider I use (I am currently studying towards my ACCA and have only my strategic papers left) and they use SPL and SOFP (Statement of Financial Position) as standard acronyms because this is the 'new money' version of P&L and Balance Sheet.
Accountants that trained many years ago will only use the latter, whereas those of us that are more recently trained will use both interchangeably dependent on who we are conversing with.

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Replying to elliebhall023:
By Charlie Carne
07th Oct 2019 12:45

You may be right, but that depends upon what 'standard' means. I should have thought that, if I Googled "SPL", I would find its meaning. Such a search reveals Scottish Premier League, a page of Wikipedia terms (none of which include the meaning intended here), Shared Parental Leave, Sailplane Pilot Licence, Single Euro Payments Area Proxy Lookup (yup....me neither!), and a bunch of company names. After looking through four pages of Google search terms I gave up. Even searching for terms "SPL profit" or "SPL statement" did not give me "Statement of Profit or Loss". A Google search for "P&L", however, immediately yields the meaning "profit and loss".

Wikipedia also does not recognise the term 'SPL', though a search for "P&L" immediately takes me to a page on "income statement or profit and loss account". That page references the term "statement of profit or loss" but not the initialism 'SPL'.

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Replying to elliebhall023:
RLI
By lionofludesch
07th Oct 2019 13:36

elliebhall023 wrote:

This is a standard acronym; just because you are not familiar with it, does not mean I am using 'text speak' in a professional conversation.

Congratulations on being so up to date that no-one understands you.

Acronyms take many years to be accepted. As you have discovered.

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By AdShawBPR
02nd Oct 2019 10:49

To be precise, I'd prefer reduction in Employer's NI rather than reduction in wages.

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Replying to AdShawBPR:
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By elliebhall023
02nd Oct 2019 21:28

Agreed, however some accountants will include the employer NI within the wages expense account as opposed to an expense in itself, which may be the reason for some of the other replies.

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By petestar1969
02nd Oct 2019 11:45

If you work with people who believe the Employment Allowance is income then you either need to find a new job or get rid of them (dependent, of course, on your role in the firm).

I've never heard anything so daft....

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