Most UK-based employers are required to operate PAYE as part of their regular payroll system in compliance with HMRC tax collection. Through PAYE, employers will deduct income taxes and National Insurance contributions directly from employee pay. What follows is information regarding the basic guidelines for what is required on the part of employers. If you have questions about your particular situation, call HM Revenue or the National Insurance contact number and speak with an agent directly.
Employee payments include salary, wages, tips, paid sick time, and paid maternity leave. Out of these earnings, you will need to cut the appropriate amount of taxes and National Insurance payment. Student loan repayments and/or pension contributions may also need to be deducted. If none of the employees on your payroll earn £112 or more per week, you may be exempt from PAYE. There are other conditions though, such as when employees receive paid expenses and/or benefits, have another job, or receive a pension. Contact HM Revenue and Customs to learn more.
If you run payroll or have someone else complete the task in-house, you’ll need to report employee payments and any deductions to HMRC either on or before each pay date. The payroll software that you use will calculate the amount of tax and National insurance that is owed. This amount will include National Insurance payments for every employee that earns more than £155 on the week. If you need to claim any type of deduction, you will need to submit another report to HMRC. Most payments are due to HMRC monthly.
There is some regular maintenance required when paying into the PAYE system. For instance, HMRC contact will be required in order to report each new individual that you hire. You will also need to submit a report when employee circumstances change. For example, the individual reaches pension age. Annual reports will also be necessary and should be run at the conclusion of each tax year. In this report, you will tell HMRC about the various expenses and benefits that you have incurred or paid out.
For new employers, figuring out the PAYE system can take some time. Calling the HMRC contact number is an excellent first step for those who have questions or need more detailed information. Modern payroll software can be quite beneficial, and you can ask for a recommendation when you contact HMRC. Complying with the laws is of course quite important, so do take the time to call for support if you need answers to questions about deducting taxes or submitting payments to HM Revenue.