Could I please have some advice and guidence on a particular issue. I am locked in an argument with a retired bookkeeper over paying wages. When paying someone their net wage i am of the understanding and opinion you pay exactly what the net wage is to the penny. They are of the opinion you can round it up. I would just like some clarification of this. Many thanks in advance.
what sort of rounding are we talking about? to the nearest £1, nearest £10?
I assume that the employee's salary was being balanced out by the bookkeeper at year end? Or did the employees just get an unofficial payrise?
My opinion, like yours is that wages should always be to the penny.
I would be interested to know other peoples views on this as mine comes from paying large numbers of employee's weekly so there is never any question in my mind as to absolute accuracy.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree, there can be no excuse for not paying to the penny. In my opinion this must always be done, no excuse. Never heard of it being done any other way
Thanks for your response Shamus. This is not actually related to any actual case but an ongoing argument with my mother in law who came out with this gem I just wanted some kind of clarification from people who work in this sector. I work in an accounts department and would like to eventually do the ICB Paye qualification.
If you can show that you've always rounded up the week after rounding down then obviously no harm is done; its just to make it easier for the cashier etc.
I'd still prefer the exact wage paid to be shown on the payslip though.
Thanks for your post Tim. Unfortunately her opinion is you can round up to the nearest pound week in week out. I'm just the stupid one thinking everything should balance. Inlaws eh!!
I'd like to know where she got this from. Could be it always happened at an employment she has had.
She could theoretically appeal against any later assessment under 'employer error' grounds - Reg 72, from memory; although HMRC often chase the employee first. .
Back in the days when I used to do manual payroll and worked it all out using books of tables............
The tables did not include pence for gross pay, so we used to round down the gross amount to work out the tax and NIC. This may have been were the bookkeeper got it from. But we still paid the net pay to the penny.
Of course when we put figures on the tax returns we have always rounded down the the Gross Income to the nearest pound, and rounded up the Tax to the nearest pound. (Please do not take this to be what you do to every single individual amount of income & tax figure on the tax return as for some figures it does not strictly work this way!)
-- Edited by YLB-HO on Saturday 23rd of July 2011 11:04:52 AM
I've had clients before who have taken a similar view with my bill - the invoice amount has a few pence (with VAT), they write a cheque and miss the pence off. Luckily on the otherside, we have a few clients who settle our bill cash, and in the 17½% days, £100 + VAT would give a bill of £117.50, they would pay £120 and not bother with the change.
But agree with the comment about it being easier for the cashier to pay round wages. Would assume that it's rectified every so often.
I've actually had it with the bank where in the days before internet banking I used to post transfer slips in the overnight box.
The transfers were wages and expenses calculated to the penny but on numerous occassions the bank would transfer an amount rounded to the nearest pound.
All I can say is thank goodness for the advent of the internet.... Just realised how old I just made myself sound by admitting that I've been doing this since pre internet days.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I've actually had another look at rounding - prompted by RTI and the need to have a client 'OK' the payroll before filing.
So that the employee is never in a situation of being underpaid, I thought I'd hit on a neat solution of advancing the employee £1 to £10 once or twice a year. Then subsequently round down to the nearest pound for the next 26 weeks or so.
Unfortunately my software isn't taxing this advance so although I've sounded out ACAS, I don't know if I'm on shaky ground or not.
When paying employees in cash it is reasonably common to round the net pay to eg 50p or £1 to stop the employer from having to get a pile of shrapnel to hand out. It makes preparing the cash envelopes far simpler. The shortfall or overpayment it carried forward to the next week (automatically by the payroll software if it has the facility)
