A non-current liability is an amount the business owes that falls due more than twelve months out. Long-term bank loans, mortgage bonds, finance leases and long-term provisions are typical examples. On the balance sheet they are shown below current liabilities.
What it means
Splitting liabilities by when they fall due tells a reader how much pressure is on the business in the near term versus spread over years. The portion of a long-term loan repayable within the next twelve months is reclassified as a current liability, leaving only the longer-dated balance as non-current.
Where it fits in
Payroll obligations are almost always current - PAYE, UIF, SDL and net pay are settled within weeks. A non-current payroll-related liability would be unusual, such as a long-term provision for post-retirement benefits, where the obligation extends well beyond the year.
Key rules
- Falls due more than twelve months out.
- Includes long-term loans, bonds, finance leases and long-term provisions.
- The portion due within twelve months is reclassified as current.
- Routine payroll liabilities are current, not non-current.
