HMRC PAYE and NI Payments
When a payroll has been created using Xero Payroll it automatically posts the entries into your accounting ledgers for you. Whilst many people preferred the Pay Run option where it would create a Bill to allocate the payments against this was not good practice. As the employee net payments were created as Bills anyone with access to the system could for example see how much each employee was being paid for example.
This does mean however that using Xero Payroll has meant a change in process for dealing with the PAYE/NI Payments that you would have previously been able to allocate to the outstanding Bill.
The default PAYE/NI Control account which is where the payments due to HMRC are posted is 825 – PAYE Payable. This is where you need to post the PAYE/NI payments made to HMRC. From the bank you can create a transaction per the below screen.
As Xero is intuitive it will learn the posting applied and it will prompt you with this suggestion after a couple of months. If you want something more robust that will just require clicking ‘OK’ then why not try setting up a Bank Rule which each time something comes through the bank which meet your set criteria Xero will process per your instructions. The video below explains this in more detail and we have included a screen shot below of how your rule may look. Once you have mastered this you will be apply to apply this logic to other bank payments and receipts.