Which Nominal code to use for Furlough payments??

[Gardenwoe]

Wonder if there are any accountants on here that can give me a hand - mine are proving tricky to get hold of and Google isnt't helping much!

I don't run my own payroll, but I do allocate my gross/net wages/NI etc and do a monthly journal on an accounts system (i use Xero Accounting)

My accountants do the actual physical payroll after I give them the monthly hours. I have done the JRS figures on Gov.uk and have had March and April monies paid in to our business bank account. From there I have paid our staff the money due from the goverment furlough scheme.

Can someone suggest which nominal codes I use for the following;

1. The money that came in to our bank account from the Government
2. The money I pay out to each member of staff for the 80% furlough
3. The money I pay out to top up the remaining 20%

I presume I will have to create new nominal codes - but I don't know which ones to use.

Any advice gratefully received!

Gross Pay.

Furlough paid out and money received from government will cancel one another out.
20% is the true cost to the business anyway.

Thanks for the prompt reply Fronttoback.
So I can use the nominal code I use for Gross Wages (i think its 7006) i will use that for the payments out.
But what nominal code do i use to allocate the income from the goverment? Currenly the only income I have is sales which is under 4000 and some small bank interest which goes under 8205 i think

I use 477 Salaries to allocate pay, and then (purely for my information) set up a new nominal code under Revenue as 201 Furlough Payment. You can set up new nominal codes if you click on Accounting and then Chart of Accounts. This gives you a full list of codes which you can then add to by pressing "add account"

There was guidance from HMRC - you need to show the income under ‘other income’ on your P&L. Don’t offset.

I would go with something like a miscellaneous income or grants income. What nominals have you got?

Leave the pay to the staff where it normally goes.

Show the grant income in a code of its own. Maybe called grants or other income.

Do not net off.

(I am an FD)

Xero doesn’t really have nominal codes, you can call accounts whatever you like. ( I guess you have used Sage in the past?) process payroll as usual paying whatever you are paying (100% or 80%) and set up an income category of grant income.

We have told our clients to put it all to gross pay and we will sort it out properly on our side when we come to do their accounts.

It shouldn't be contra'd to gross wages - it needs to be recorded as income!

WitchDancer assuming OP is just doing the bookkeeping and her accountants prepare her accounts it doesn't matter, we are telling clients to post to gross pay to make it easy for them and then we will move it when we produce the accounts.

It's better practice to post it correctly in the first place. If her accountants just skim the TB then it could be missed, particularly if they are not expecting it to go to an unusual nominal.

I agree. I would not be looking in expense codes to try and fish out income

Definitely post to an income nominal code otherwise could easily be missed at the year end.