PAYE

[ryansdaughter]

I am only employee of the firm and have started to draw up accounts. Every month my boss pays over to HMRC the income tax and employer/employee NIC based on my gross salary. For accounting purposes, can he claim any of this amount as an allowable expense when drawing up accounts?

yes, all of it - ie your net pay + all amounts paid over to HMRC.

Thanks for your reply. Just to make sure that I've understood you correctly, if for example my net monthly salary is £850 and emloyer/employee NIC and income tax £260, then his total claimable business expense would be £1,110? Oops, I had better revise the draft accounts then as I thought he couldn't claim the income tax/NIC as an expense!

yes that is correct.

actually the way it works is that the gross pay plus employers ni is the company expense, that is what it costs the company to employ you. the tax and employees ni deducted from the gross pay to give your net pay is your tax/ni liability, the employer is simply acting as a collection agency for HMRC in deducting it from your pay and paying it over.

(but gross pay + employers ni = net pay + all ni & PAYE, so the same effect)

Can I just add, I'm not sure what the accounts you are drawing up are being used for, but if you don't know something as basic as this (which it is from an accounting point of view) then I would be concerned about what else you might be slipping up on, would it be worth considering a basic bookkeeping course?