How to correctly account/report Reimbursement of Statutory Maternity Pay

Question asked by Edward Watkins 9 years ago

Hi, I was wondering if someone could help me with the correct way in which to report and account for Reimbursement of Statutory Maternity Pay in clearbooks?

Our accountant applied for an advance payment of SMP, which we received, so my first question is how exactly to classify the payment in clearbooks accounting?

The second is when we file the EPS monthly do we just go report the amount reclaimed, do we need to do anything else to account for the advanced payment?

Apologies if these questions seem stupid, it just has us a little stumped as the correct way to do this on clearbooks system.

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8 Replies

Hi Edward - this is a new one to me and certainly not a stupid question, so I'll give it a try.

Firstly, with regard to the EPS, I'm pretty sure you file that with the SMP paid to employees, as normal with no need to account for the advanced payment. HMRC will do the numbers to offset the sums they have advanced against what you are able to reclaim.

The fiddly bit comes, as you ask, within the bookkeeping itself in that Clear Books will generate a bill due to HMRC having deducted the SMP rebate (crediting salary costs), so say your full PAYE due was £1,000 but you were due a rebate of £103, then CB will show you owing £897 to HMRC but, you've already had the £103 in advance and so need to pay them £1,000.

In this case it would seem the best way is to put the advance payment against salaries cost and edit the HMRC bill deleting the SMP rebate line thus increasing the bill to what you owe them.

Give it a go and if it doesn't work contact support and they can login to your books and advise on whether an alternative approach is workable.

Best answer
9 years ago

Hi, Just thought I'd update as to how we handled this in case anyone stumbles into the same situation.

We ended up coding the advance SMP payment from HRMC to 'Loans Receivable' (as 'Salaries' is set up in clearbooks as a PL not a BS, so does not contra).

Then we edited the HMRC bill, deleting the SMP rebate line.

Then, to correctly account for the SMP payment we created a new journal to debit 'Salaries' the SMP rebate, and credit the same to "Loans receivable"

9 years ago

Thanks for the help guys, I think that clears it up...!

9 years ago

Arrr ok yes, didn't think of that. Wonderful.

I've just tested it on a director. Basic pay of £671, SMP of £500. PAYE is £1.60 which it's duly deducted from the bill. I then processed a big salary for the following month and it even c/f the remaining £498.40 when importing the bill [well, a bit more actually due to the 103% reclaim).

Very nice to know indeed...

PS sorry to clog up your thread Edward.

9 years ago

Oh dear - I don't know about the EPS, that's independent of the accounts (I hope).

It's entering the £100 SMP on the employee's payslip, thus creating the £103 rebate on the payroll screen that is also appearing as a separate line in the bill.

file

9 years ago

Well isn't that fancy. I had no idea putting anything on the EPS would actually contribute to the HMRC bill.

You learn something new...

9 years ago

Hi Kevin

The bill will include a negative line for the SMP rebate:

file

9 years ago

Will CB create the bill less the SMP? If it's only on the EPS I doubt it'll get picked up so no amendment will be necessary.

9 years ago

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