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Journal Setup (UK)

This guide explains how to set up and manage journal entries for payroll processing.

What's covered in this guide?

  1. What is a journal?

  2. Access journal setup

  3. Pre-built accounts

  4. Create a new account

  5. Link accounts to earnings rates

  6. Tracking categories (cost centre splits)

  7. Download journal entries for pay runs

What is a journal?

A journal entry lists the different accounts you use to run payroll. Each time you pay your staff, multiple accounts can contribute to the pay run, such as:

  • Wage expenses

  • Employer NIC and pension costs

  • Tax and NIC liabilities

  • Leave and benefit expenses

Separating wages into the relevant accounts simplifies each pay run and helps you keep track of expenses.

Access journal setup

View and set up journals and accounts through Payroll > Settings > Journal Setup (Accounts).

Pre-built accounts

Several accounts are pre-built into the journal setup based on common bookkeeping scenarios:

Debits

  • Wages Expense (earnings by rate)

  • Employer NIC Expense

  • Pension Expense

  • Benefit Expense

  • Reimbursements

Credits

  • Wages Payable (net pay)

  • PAYE Payable

  • Employee NIC Payable

  • National Insurance Contribution (employer NIC liability)

  • Student Loan Payable

  • Employee Pension Payable

  • Workplace Pension Contribution (employer pension liability)

  • Benefit Payable

  • Deductions

To edit an existing account, click on the account Name, adjust the Name or Code, and click Update to save.

Adjust the name or code to your preference, and click the Update button to save the changes.

Create a new account

When more accounts are needed for specific reporting, create one via the + New button on the Journal Setup (Accounts) page. Add the Name and Code, then click Create.

Add the relevant Name and Code, then finish by clicking the Create button.

New accounts will appear in your journal once created, and can be linked to earnings rates.

Link accounts to earnings rates

Once a new account is created, link it to the appropriate earnings rate:

  1. Navigate to Payroll > Settings > Earnings Rates

  2. Find the relevant earnings rate and click the Name

  3. Use the Journal Account dropdown to select the correct account

  4. Click Update to save the changesNavigate to the Earnings Rates page through Payroll > Settings > Earnings Rate


Tracking Categories (Cost Centre Splits)

If you use Xero tracking categories (or similar in MYOB), certain journal lines can be split by department or cost centre:

  • Splits: Wages Expense, Employer NIC Expense, Pension Expense, and Benefit Expense

  • No split (always shown as a total): Reimbursements, and every credit/liability line (Wages Payable, PAYE Payable, NIC Payable, Student Loan Payable, Pension Payable, Benefit Payable, Deductions)

Learn more on tracking categories.

Note: Only wage expense lines support tracking category splits - liability lines (PAYE, NIC payable, etc.) appear as totals.

Download journal entries for pay runs

To download journal entries for a pay run:

  1. Navigate to Payroll > Pay Runs

  2. Select the relevant posted pay run

  3. Choose the appropriate journal format:

  • Download CSV

  • Xero Journal

Pension Setup

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