The company I work for has received a letter regarding an employee owing money for council tax and has requested we deduct a percentage out of his wage every week.
We pay this directly to the council by cheque.
How would you categorise this in the columns in the accounts and would it be classed as an expense.
It comes out of net pay so the expense is still part of the gross wage however you should set up a liability account for attachment of earnings and post it to there as a credit then when you pay it credit bank and debit attachment of earnings, this way it isn't part of net pay.
It works we have to do it where I work so it's tried and tested :)
Attachments of earnings come after net pay, they aren't part of gross pay so it a deduction after tax. Set up a column/account to show attachment of earnings and deduct them from net pay so split them from the net pay and still have them as part of gross wage so if joe bloggs has earned £100 gross and that is £80 net but has an attachment for £10 then it would be Debit Gross wage £100 Credit HMRC £20 Credit Net pay £70 Credit Attachment of earnings £10.
-- Edited by Rhianrach on Wednesday 23rd of February 2011 02:58:13 PM
