When categorising a payroll transaction that includes deductions such as National Insurance contributions and other taxes deducted at the source, it's essential to accurately allocate each component. Below is a step-by-step guide on how to categorise such transactions effectively:
1. Identifying the Payroll Transaction:
- Locate the payroll transaction within your bank transactions page.
2. Splitting the Transaction:
- Click on 'Split/Attach' to expand the view and access additional categorisation options.
3. Entering Details:
- Enter the employee's name and select an appropriate category such as 'Employee Salary' or 'Wage'.
- If VAT applies, specify the VAT% accordingly.
4. Splitting for Deductions:
- Press 'Split Category/VAT' to divide the transaction.
- Select 'Split Supplier' to add other deductions such as PAYE contributions and National Insurance contributions.
5. Allocating National Insurance Contributions:
- Use 'Split Category/VAT' again to include 'National Insurance' and allocate each part of the contributions accordingly.
6. Adjusting the Transaction Value:
- Deduct the amount 'still to review' from the gross transaction value to accurately reflect the split.
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7. Confirming Changes:
- Click 'Done' to confirm the changes made.
- Press 'Confirm' to finalise the categorisation.
Note: You can create a new category, such as 'National Insurance', by selecting 'Customise Categories' from the 'ENTER CATEGORY' dropdown list. Choose the parent category 'Taxes' and follow the prompts to create the new category.
By following these steps, you can effectively categorise payroll transactions with deductions, ensuring accurate record-keeping and compliance with tax regulations. Proper allocation of each component allows for clear tracking of expenses and deductions, providing a comprehensive overview of your financial transactions.