Sage 50 Accounts

Automatic contra entries

Sometimes you might have a customer who is also a supplier, and you want to offset customer and supplier invoices.  This is a contra entry.

You can not use Automatic Contra Entries if:

• If you operate a VAT Cash Accounting scheme.
• You need to offset customer or supplier transactions other than invoices. For example, customer credit notes (SC) with supplier credit notes (PC)
• CIS transactions – you can post manual contra entries for the full value of CIS transactions only.
• Non-base currency transaction.

Post manual contra entries – covered in next month’s newsletter.

Create a contra entry bank account.

1. Go to Bank accounts, then select New.
2. Enter the relevant details for the new bank account:

A/C Ref * The nominal code you want to use for the new bank account.

Note: If you are using Sage’s default nominal ledger structure, use a number within the range of 1200 to 1239.  These numbers are in the existing bank account range in the Chart of Accounts.  This ensures that the bank balances appear correctly on your Management reports.

Nominal Name Enter a description for the new bank account, for example, Contra Entries bank account.

A/C Type Select Cheque Account from the drop-down list.

No Bank Reconciliation If you do not want to run a bank reconciliation for this bank account, select this.

3. Click Save then click

How to post the contra entry

1. Go to Customers or Suppliers, and then select Contra Entries.
2. Select the contra entry Bank A/C, then select the relevant A/C Ref for both the Sales Ledger and the Purchase Ledger.
3. Select the invoices to offset against each other from both windows, then click OK.

If there is a mismatch in values, you are prompted to part contra the lowest account.

For example, a £120.00 contra entry offsets a £120 sales invoice, leaving £30 outstanding on a £150 purchase invoice.

4. To confirm this, click Yes.

The contra entry posts an SR and a PP to the contra entry bank account.  The accounts are the value of the invoices, or the lessor value if applicable.

Reserve a contra entry

To reverse a contra entry, delete or reverse the transaction posted due to the contra entry.  To do this, identify the transaction and delete or reverse them as usual.

If you would like any help with creating a contra bank account and or doing contras or if you need any other help with your Sage 50 Accounts, please contact us

Payroll

New NHS pension legislation applicable from 1^st April 2025

You will need to download and install Sage 50 Payroll V31.00.236.

For Employees on an NHS pension scheme, their contribution rate depends on what tier their salary fits in.  The salary value of these tiers, and the contribution rate percentages may change on 1^st April each year.

SAGE were not sent the information in time to include the normal year end update.  Instead, the background update to v31.00.236 allows you to enter the legislation.

Solution

The updated NHS pension legislation that applies retrospectively from 1^st April 2025 onwards is now available.

NOTE If you have already processed a payroll for 1^st April or after using the old legislation, it is recommended that you reprocess it.

Enter new legislation

Follow the steps below to add the new NHS pension legislation values to your software:

1. Select Payroll, then Change Process Date.
2. Set the process date to 01/04/2025 then select OK.
3. Select Company, then Legislation.
4. Go to the NHS Pension
5. Click Add Date enter the date 01/04/2025, then click OK.
6. Click the drop-down option to the right of Effective from and select 01/04/2025.

This is essential to ensure you edit the correct legislation values.

7. Enter the relevant Band To values and check the rates are correct. Your software adds the Band From value automatically.

NOTE: check that you have entered these correctly, as a mistake here can affect your employees’ tier and/or contributions.

8. Select OK.
9. On your employees list, select any of your employees on the NHS pension scheme.
10. Select Payroll, then NHS Pension Tiers.
11. Select Save, this step refreshes the calculations bases on the new legislation values you entered.

If you need updating the new NHS Pension legislation values or need any other help or advice with your payroll, please contact us

We can also provide a remote access service where we can link into your computer to help you resolve your Sage Accounts or Payroll problems.

Sage 50 Accounts

Writing Off Customer Bad Debts

Sometimes you might need to write off outstanding transactions on a customer’s account, for example if they cease trading.  If this happens, the total balance on their account is transferred to a Bad Debt Write Off nominal code, this changes the debtors figure on the Balance Sheet report, and the amount written off is set against this year’s profit and loss as an overhead.

To create a Bad Debt Write Off nominal code

If you are using the Sage default nominal code structure you will already have a nominal code for Bad Debt Write Off, 8100 by default.  If you have deleted this account, or created you own nominal structure and have not created a Bad Debt Write Off nominal code, you will need to create one before proceeding.

1. Nominal codes > New/edit
2. Enter the number you want to use for the Bad Debt Write Off nominal code, for example, 8100.

Note: this should be within the Overhead section of the Profit and Loss report.

1. Enter the name of the account, for example, Bad Debt Write Off.

2 Save > Close.

Writing off a bad debt

We will firstly assume that the customer has a positive balance, therefore we need to post a credit note.

1. Customers > Batch credit
2. Enter the relevant customer information.
3. A/C – Customer A/c code
4. Date – Date of write off.
5. Credit No. – Bad Debt
6. N/C – 8100
7. Details – Bad Debt Write Off
8. Net – Net amount of bad debt (if you do not know the net amount enter the gross amount and click F9 to calculate the Net amount.
9. T/C – T1
10. VAT – check the Vat has been calculated correctly or type in the correct VAT figure.
11. Save >

If the customer has overpaid i.e. the customer has a negative balance, therefore we need to post a sales invoice.

1. Customers > Batch invoice
2. Enter the relevant customer information.
3. A/C – Customer A/c code
4. Date – Date of write off.
5. Ref – Bad Debt
6. N/C – 8100
7. Details – Bad Debt Write Off
8. Net – enter the amount of the overpayment to be written off.
9. T/C – T9
10. Save > Close.

You have now posted the invoice to write off the debt.

You now need to allocate all the outstanding transactions on the customer’s account.

1. Customers > Customer receipt
2. Select the relevant customer.
3. Enter the relevant date you want to allocate the bad debt write off.
4. Allocate the invoices/credit notes/Sales on account against each other as required.

If you would help writing off customer bad debts or customer over payments or need any other help with your Sage 50 Accounts, please contact us

Payroll

Payroll New Year

1. Check you are using the correct version.

Before you start processing the new tax year, you must have installed the update for the 2024/25 tax year, V31.00.231, if you process a NHS Pension scheme, ensure you have installed background update to V31.00.236 and enter the new NHS pension legislation.

2. Update your employees’ tax codes.

For the 2025/26 tax year, the personal allowance and emergency tax code remains the same at £12,570 and 1257L. This means you do not need to change your employees’ tax codes unless informed by HMRC. You do however need to remove the week 1 / month 1 flag on any employees’ tax codes before processing in the new tax year.

3. Small employers’ relief

If you are eligible for Small Employers’ Relief (SER) you need to set your Sage Payroll to calculate and claim it.

1. Click Company then
2. Select the Eligible for Small Employers’ Relief check box.
3. Click OK
4. Apply for Employment Allowance

TIP: make sure your process date is set to 6/04/2025 before completing this.

In the 2025/26 tax year the employment allowance has increased to £10,500. This allows eligible employers to reduce their annual Employers National Insurance liability by up to £10,500.

Submit the Employer Payment Summary (EPS) for Employment Allowance

1. Click Company, then click Settings.
2. Click the Apply for EA
3. From the State Aid drop-down menu, select one of the following options:

• Applicable
• Not Applicable

If State Aid is applicable, select the relevant State Aid Sector. For more information on State aid, visit Gov.uk.

4. Click Submit then click Continue, then click Submit then Submit

At this stage, HMRC receives an EPS with Employment Allowance application.

• If your application is unsuccessful, you receive a notification in your IR Secure Mailbox within five working days.
• If you do not hear back from HMRC, then your application has been successful, and you can then select the Eligible for Employment Allowance check box within Company then Settings. Once you select this check box, your software is set up to calculate Employer Allowance.

Memo

If you select the Eligible for Employment Allowance check box after you have already processed one or more tax months, you must re-run your P32 for each month of the tax year starting from month 1. Sage 50 Payroll then calculated the Employment Allowance due in each period and records these values in Company Settings > HMRC Payments of your software.

5. Pensions module

If you use the pension module, when you process the first period of the new tax year, you are prompted to check your pension contribution rates are correct.

Pensions Data Exchange

If you use the Pensions Data Exchange (PDX) to send data to your provider, there are some additional steps to complete at the start of the tax year.

6. New legislation for 2025/2025 tax year

There are a few changes to payroll legislation in the new tax year, including a change to the National Minimum Wage from 1 April etc.

If you need help running your payroll year end routine or setting up for the new Payroll year or need any other help or advice with your payroll, please contact us

We can also provide a remote access service where we can link into your computer to help you resolve your Sage Accounts or Payroll problems.