Our payroll is outsourced and I cannot reconcile the figures that we have been provided this month. I cannot go back to our supplier as he will not be back until next week. One of our employees has decided to contribute to a stakeholder pension for the first time. The amount contributed is £300 gross which is deducted from the salary and we pay the pension contribution on behalf of the employee (£240 net).
The figures I have been provided are as follows:
Gross salary £1,908.33 (i.e. normal of £2,208.33 less £300) EER NIC £182.02 EEE NIC £156.72 PAYE £257 Student loan: £59
Net pay: £1,435.61
What should the journal entries be as I keep getting a difference of £60 (i.e. the tax). Should the gross salary be recorded as £2,148.33 (i.e.£2,208.33 less £240)? Would it be that simple?
Sorry, but I have been thinking about it for a long time and this is giving me a headache now!
Firstly, shame on your payroll supplier for disappearing for a week! I'd think about finding a payroll bureau who can help you when YOU need them not the other way around.
The calculation as you've described it - is it a salary sacrifice scheme? If so, I'm not sure why the full amount isn't paid over to the pension? Also i notice the student loan is taken from the reduced gross and not the full gross which is normally an indicator of sacrifice.
You might need a chat with your pension provider to check the tax treatment is correct. Otherwise your payroll provider may have set up the scheme wrongly
Not sure how much help I've been for getting it into the journal :(
Thank you for your quick response. I am not sure if it is a salary sacrifice scheme and I am checking this with the person who has arranged it. All I know is that the employee wanted the amount to be deducted from the salary and paid by the company to the pension provider. I will let you know as soon as I know more.
I would normally expect then that the full gross would be shown, then the gross pension contribution displayed on the deduction side of the payslip with the tax relief given at source. Alternatively, the net deduction shown and the pension company adding back the tax. All depends on the type of scheme & pension provider. Either way, it still sounds like its been set up wrong
Peasie, I had the same journal but I received the direct debit advice from the pension provider confirming the payment of the net amount (£240). I find this very confusing and I don't know if it is an error from the pension provider or the payroll provider.
