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The Payroll reconciliation BS template supports the payroll-related liabilities on the balance sheet, which are the amounts owed to HMRC for PAYE and National Insurance, the pension contributions payable, and any unpaid net wages. It does this by reconciling a summary of the payroll run to the mapped trial balance control accounts. It has a sibling template, Payroll reconciliation PnL, which reconciles the profit and loss payroll cost lines instead of the balance sheet control accounts, and pulls some of its figures directly from this template.

Table of contents 

When should I use this template?

Use it for any period where the business runs a payroll and carries payroll-related balances on the balance sheet: PAYE/NIC payable, pension contributions payable, and/or unpaid net wages. Complete it once the payroll figures for the period (gross pay, deductions, employer costs, amounts paid) are available, normally from the payroll provider's year-end or period-end summary.

It reconciles balance sheet control account balances only. Profit and loss payroll costs are reconciled separately in the Payroll reconciliation PnL template.

Before you start

  • Make sure the UK Working Papers workflow is active for the client and the payroll control accounts (PAYE/NIC, pension, and wages/net pay accrual) are mapped in the trial balance. The template defaults to standard UK mapped codes but lets you override the range for each control.
  • Have the payroll summary for the period ready (gross pay, PAYE, employee/employer NI, pension contributions, other deductions, net pay paid, HMRC/pension payments made), broken down by pay period or employee.
  • If the business also has payroll costs to reconcile in the profit and loss, complete this template first. The Payroll reconciliation PnL template reads the Gross, Employer NI and Employer Pension totals entered here.
  • Where an account template is used for the individual PAYE/NIC, wages or pension nominal codes, note that the Payroll account reconciliation account template reads the reconciliation status and account mapping directly from this template (and from Payroll reconciliation PnL), so you don't need to reconcile those accounts separately.

What this template is for

Payroll liabilities are carried as creditors at the period end rather than expensed only when paid, because they represent amounts already owed for service the employees have already provided. Each liability is recognised because a legal or constructive obligation to pay it exists at the balance sheet date, and payroll taxation and social security amounts are shown separately from other creditors.

The template's default account mappings include both a "due within one year" (24xxxx) and "due after more than one year" (25xxxx) range, reflecting how these balances are usually split on the balance sheet.

The template also captures the average number of employees, which feeds the statutory employee numbers disclosure.

Step 1: Complete the analysis of payroll

Tick the box next to Analysis of payroll (on by default) to reveal the payroll data-entry table. When it's off, the table is hidden and shows a greyed-out prompt to enable it. Tick Show period/employee as separate field if you want the "Period/Employee" identifier split into two columns instead of one combined column.

Add a row per pay period or employee (the row description defaults to "Payroll" for bulk import) and enter, for each: Gross, the income tax withheld at source (labelled PAYE for UK businesses, ETI for Guernsey, ITIS for Jersey, set automatically from the business's country), Employee NI (or PRSI for Ireland), Employee pension, Other tax deductions, Other deductions, Paid net salary, Employer NI, Employer pension, Other reliefs, Paid HMRC, and Paid pension.

Tick Director on any row relating to a director's payroll. This splits out a "Subtotal directors" row underneath the grand total for each column, so directors' payroll can be identified separately within the working paper.

The template calculates Net wage, Unpaid wages, Tax liability and Pension liability for each row and totals every column. These totals drive the three control reconciliations below and, for Gross, Employer NI and Employer pension, are what the linked Payroll reconciliation PnL template pulls in.

Step 2: Record average monthly employees

Tick Average monthly employees and attach supporting documents if needed. Enter the number of employees per payroll for each month in the period. The template totals these and divides by the number of months to give the Average monthly employees figure.

Step 3: Reconcile the Social Insurance control (PAYE/NIC)

Use the account picker next to SOCIAL INSURANCE CONTROL to confirm or change the mapped account range. It defaults to the standard UK PAYE/NIC control codes (240501, 240507, 250501, 250507). The table above shows the current, comparative-year and comparative-period balances on the mapped account(s).

Below that, the reconciliation itself runs from the opening balance to the closing balance, bringing in the PAYE/ETI/ITIS due, employee and employer NI due, other reliefs, HMRC paid, and other tax deductions calculated from the payroll table in Step 1. Add any further reconciling entries as description/amount rows.

The Difference at the foot must be nil. If it isn't, a red unreconciled indicator is shown with the amount outstanding. Check the account mapping is correct and that all payroll figures and payments have been entered, then add any missing reconciling item until it clears to a green indicator.

Step 4: Reconcile the Wages control

The WAGES CONTROL section works the same way for the net-wages/unpaid-salary accrual. Pick the mapped account range (defaulting to 240503/250503), review the opening/closing balances, and reconcile the movement (net wages due, wages paid, plus any adjustments) to nil. The same unreconciled indicator and resolution approach applies.

Step 5: Reconcile the Pension control

The PENSION CONTROL section reconciles the pension contributions liability the same way: default mapped range 240504/250504, opening/closing balances, and a reconciliation of pension due (employee + employer contributions from Step 1) against pension paid and any adjustments, down to a nil difference.

Step 6: Review the analysis of carried-forward balance (optional)

Under each of the three controls, tick Analysis of carried forward balance to add a breakdown of what makes up the closing balance (for example by employee or by tax period), with a description, optional attachment, and current/comparative values per line.

The template recalculates the total of the lines you enter and compares it to the trial balance balance for that control. A difference here also triggers a red unreconciled indicator, resolved by correcting the breakdown or the trial balance mapping. Use the free-text note and file attachment underneath each control to record any additional explanation.

What flows through to the rest of the accounts/workflow?

  • The Average monthly employees figure is picked up automatically as the default in the Employee numbers note and in the UK general settings dashboard, for both the current period and comparatives. It can still be overridden in General information if needed.
  • Gross, Employer NI and Employer Pension totals from the payroll table are read directly by the Payroll reconciliation PnL template to compare against the profit and loss payroll cost accounts.
  • The reconciled/unreconciled status and account mapping for each control (Social Insurance, Wages, Pension) are read by the Payroll account reconciliation account template, so when a user views one of the mapped payroll accounts they see whether it's reconciled here (or in Payroll reconciliation PnL) without duplicating the work.
  • The reconciled control balances support the PAYE/NIC, pension and wages accrual figures within creditors on the balance sheet (and the related note), split between amounts due within one year and after more than one year.

What rolls forward next year?

The account mappings selected for each control (Social Insurance, Wages, Pension) persist. In the analysis of carried-forward balance breakdown, each line's description rolls forward and its current-year value becomes next year's comparative value automatically at the year end.

The payroll summary table itself (Step 1) does not roll forward. It's re-entered or re-imported from the new period's payroll data each year, as is the average employees table.

Where the data comes from

  • The trial balance, via the mapped account range you confirm for each of the Social Insurance, Wages and Pension controls.
  • The payroll run itself: gross pay, deductions, employer costs and payments made, entered manually or bulk-imported into the payroll, Social Insurance, Wages and Pension tables.

Frequently asked questions

Why does the template show "PAYE" for some clients and "ETI" or "ITIS" for others?

The label follows the business's country code: ETI for Guernsey, ITIS for Jersey, and PAYE for everywhere else (mainly UK businesses).

Why is there a red indicator next to Social Insurance / Wages / Pension control?

The reconciliation for that control doesn't balance to nil. Check the account mapping picks up the right code(s), that all the payroll figures and payments in Step 1 are complete, and add any further reconciling adjustment needed.

Does this template cover payroll costs in the profit and loss account?

No. That's the Payroll reconciliation PnL template, which reconciles the P&L payroll nominal codes and reads the Gross, Employer NI and Employer Pension totals from this template.