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tobijenkins1980
Level 2

How do I record a payment to HMRC for income tax paid.

I have a problem in that I am trying to record a payment to HMRC for income tax paid but finding it impossible to categorise it without it becoming an expense (expense/taxes paid) that effects my profit and loss.

 

Your paid taxes aren't an expense so shouldn't be marked off as one. Im surprised QBO doesn't have a simple labelling item for recording paying taxes to HMRC.

 

Has anyone got a work around?

11 REPLIES 11
Joseph_A
QuickBooks Team

How do I record a payment to HMRC for income tax paid.

Hello there, @tobijenkins1980.

 

Let me provide additional information to makes things clear for you. When using QuickBooks Online,  any taxes paid to HMRC by a Small Business would be either VAT or Payroll taxes that records to  Expenses.

 

On the other hand, income tax recording is supported for QuickBooks SelfEmployed.

 

To know more about Quickbooks Self Employed which offers income tax recording, you may check out our QuickBooks plans and prices: https://quickbooks.intuit.com/uk/pricing/

 

Let me know if I can be an additional help by leaving your questions in the comment section. Have a good one.

tobijenkins1980
Level 2

How do I record a payment to HMRC for income tax paid.

Thank you Joseph. I am a sole trader (not a business) who is VAT registered so I still have to pay my income tax which comes out of my bank account linked to quickbooks online. It looks like the Self Employed option won't let me do my VAT. Obviously thats no good to me.

 

Am I right in thinking that quickbooks haven't figured out that people using QBO to record and pay their VAT still have to pay income tax? 

Rubielyn_J
QuickBooks Team

How do I record a payment to HMRC for income tax paid.

Thank you for getting back in here, @tobijenkins1980.

 

I'm here to add some details about recording payment to HMRC for income tax paid. 

 

In QuickBooks Online (QBO), any taxes that are paid besides VAT and Payroll taxes are recorded as Expense (Tax Paid). I also suggest consulting an accountant to help categorize this. They are the ones who take charge of explaining thorough and can share another way of tracking the tax payment in QBO.

 

For future reference, consider checking out this article: Record a VAT payment or refund.

 

As always, I'm here to assist you if you need further assistance with managing taxes in QuickBooks. Have a blessed day.

tobijenkins1980
Level 2

How do I record a payment to HMRC for income tax paid.

This was of no help at all. 

 

Income tax paid isn't an expense so shouldn't be categorised as one. It can not reduce my turnover.

John C
QuickBooks Team

How do I record a payment to HMRC for income tax paid.

Hi tobijenkins1980 The amount of income tax due will have to be transferred from the retained earnings account, via a journal entry, of the previous year to a liability account, you can specifically set one up for your income tax. Then you would create an expense and in the category column of the expense select the liability account that you set up. Obviously you'll have to enter HMRC as the payee, the bank account that the payment was sent from, the corresponding date and in the amounts are field you should select No VAT. As you are using a liability account within the expense it will not show on your P&L.

Petermarigold
Level 1

How do I record a payment to HMRC for income tax paid.

This is totally insane. 

 

To echo the post above, why has QBO not got a simple category to handle what thousands (millions?) of self employed people do every year?

 

This is ridiculous.  Totally ridiculous. 

HDDevelopments
Level 1

How do I record a payment to HMRC for income tax paid.

I'm new to quickbooks and have instantly stumbled over this issue. My tax & NI payment is showing as an expense and impacting my turnover.

 

I need to know how to correct this before i submit my tax return!

MaryLandT
QuickBooks Team

How do I record a payment to HMRC for income tax paid.

I'm here to help correct your tax payment, HDDevelopments.

 

You need to make sure there isn't a VAT code when you record the tax payment so it won't affect your tax return.

 

Once done, you can refer to this article for instructions and detailed steps: Submit a VAT return in QuickBooks Online.

 

Stay in touch with me if there's anything else you need concerning tax payments. I'll be around to help you.

HDDevelopments
Level 1

How do I record a payment to HMRC for income tax paid.

Hi,

 

It isn't a VAT payment. 

 

It is money that has left my account to pay HMRC for the tax i owe / accrued from my previous tax year. But this isn't an expense and cannot be processed as an expense for this years tax return as its against the law.

 

Can you tell me how to change it from an expense to a different category which just shows Tax payments on their own?

 

Thanks

tobijenkins1980
Level 2

How do I record a payment to HMRC for income tax paid.

Hi all, so I posted the original question. 

 

The way I got around it was to:

 

Click the + new button > Journal entry 

 

Then under 'account type' select 'add new' then 'current liabilities' and detail type 'tax national insurance'

 

Give it a name and a description then VAT code 0% and the unpaid balance is the amount you owe in income tax. 

 

Hit save and close.

 

When the money has come out of your account in the banking tab, select the transaction and description/categorise as 'tax national insurance' and will then deduct it from the journal entry and not add it as an expense against your turnover.

 

Long winded but it works.

 

Tobi.

clara-kodyafrica
Level 1

How do I record a payment to HMRC for income tax paid.

Dear Tobi,

 

Thank you for asking this question as am experiencing the same issue.

 

However, in your answer below, what is the double entry in the journal you created?

 

Regards,

 

Clara