Explain a PAYE/NI payment to HMRC

This article describes how to explain a PAYE and National Insurance (NI) payment that has been paid out of your bank account to HMRC.

Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you will need to explain it using the appropriate ‘Type’ and ‘Category’ as detailed below.

Please note that you need to have level 6 access or above to your FreeAgent account to explain bank transactions. If you need to explain a PAYE refund that you've received from HMRC, please see this article.

1. Navigate to the relevant transaction

Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

Choose the relevant bank account from the list.

Select the transaction that relates to the PAYE payment.

2. Choose ‘Payment’ as the transaction ‘Type’

Select ‘Payment’ from the ‘Type’ drop-down menu.

3. Choose ‘PAYE/NI’ as the transaction ‘Category’

Scroll down and select ‘PAYE/NI’ from the bottom of the ‘Category’ drop-down menu.

4. Explain the transaction

Select ‘Explain Transaction’ to complete the process.

What happens next?

The transaction will appear on your ‘PAYE and NI Summary’, which can be accessed by navigating to the 'Taxes' tab at the top of the screen and selecting 'PAYE & NI' from the drop-down menu. 

Please note that you won't see this option until you've added at least one user who is on the payroll, that is, a user who is an employee or a director.

You'll see a list of all the PAYE and NI due which FreeAgent picks up from the Payroll screen.

You can also see any payments that you entered to the PAYE/NI category, which show here as money paid to HMRC in respect of your PAYE. If you're paying these off monthly, then you'll see the amounts due and paid coming out of the account one after the other. If you're paying your PAYE and NIC quarterly, then you'll see three amounts due followed by one amount paid.