When you make a payment of PAYE and NIC to HM Revenue, sometimes you'll be paying less than your payroll shows, because you've deducted the online filing incentive.
So for example, your payroll shows £175 due.
But you're actually going to pay only £100, because HM Revenue have said you should deduct the £75 incentive.
How to record this in FreeAgent?
Uploading transactions
If you're explaining your bank transactions after uploading them from online banking, you'll see only a payment of £100.
What you need to do is to split this transaction, which you can see more about here.
1. Increase the payment
Increase the payment from £100 to £175 as you explain it as PAYE and NIC.
The original shows £100...
...you need to change that to £175, and describe the payment as PAYE and NI paid, as you can see below.
That way, on the PAYE and NIC screen, your tax will show as fully paid.
2. Explain the new receipt
FreeAgent will then put a receipt of £75 in to make your bank account balance.
Explain this as Other Money In > PAYE/NI Online Filing Incentive Claimed.
That's it. Job done.
Manually entering transactions
If you're manually entering your transactions, using the numbers above, you'd put in a payment of £175 and a receipt of £75 as two separate transactions, explaining each one as above.
I can't see the online filing incentive on the PAYE and NIC screen.
That's because deducting it from your payment is only an administrative path-smoother for HM Revenue. It's easier for them if you reduce your payment rather than them having to send you a cheque. But it doesn't form part of your payroll so it won't show here.
That's the end of this article. You've seen how to treat a payment of PAYE and NIC from which the online filing incentive has been deducted.