HMRC overpayment. I have paid for Employee NI and was refunded in the form of a credit on HMRC. How can I record this refund on QB? It is not a cash refund, but a credit.

Hi @dsbooks,

You'll have to create an expense that shows this overpayment for your employee's NIC. Ensure that you select no tax for this transaction.

To make sure that you enter the correct Liabilities account posting against NI, open a journal entry first. From there, we'll check your most recent journal entries (The system automatically generates these transactions).

Here's how:

1. Click the Plus (+) sign, then select Journal entry.
2. Hit the Recent button on the upper left-hand side.

Once that's done, create an expense account, with HMRC assigned as a vendor.

Let me show you how:

1. Click the Plus (+) sign, then select Expense.
2. Set the Payee as HMRC.
3. Under the Category column, enter the liability account you searched for earlier.
4. Enter the overpayment amount, and set the VAT to No VAT.
5. Hit Save and close.

Recording this overpayment in QuickBooks Online means that you've entered a credit for the liability account. So the next time you record a payment, you can keep the credit in mind, so you only pay the exact amount.

In case you'd like to edit your employee's deductions, open this article: Add or customise deductions in QuickBooks Standard Online Payroll. Here you can find steps on how to enter an after-tax deduction, as well the steps to enter repayment. 

Feel free to post a comment below, in case you have other questions. I'll get back to you as soon as I can.