Payroll / operating PAYE on behalf of Employer clients
PAYE has now been with us for more than 70 years! Centre I in East Kilbride being the first office in the UK dedicated to the collection of tax from employees direct from their respective Employers under statutory obligation. These obligations are strict, with penalty charges to the Employer for getting it wrong, or for failing to meet deadlines.
In fact new government legislation to be enforced in 2013 will impose even greater responsibilities on the Employer to notify payment details to all Employees irrespective if they are liable to Income Tax!
We can help;
by providing a complete payroll service to relieve employers of the stress and time consuming elements, making sure their staff’s payroll service is not only meeting these statutory obligations and getting done right, but also getting done on time.
We have a dedicated payroll team at our Leith office who can advise on all aspects of running a staff’s payroll scheme, and the PAYE issues for Employers, such as;
If you provide employees with benefits, for example, company cars and health insurance, be sure to watch out for the following:
- Identification – sometimes seemingly unrelated expenditure, such as excessive staff entertaining, can be classified as a benefit.
- Benefits in kind have to be declared to HMRC on specific forms which must be submitted on time in order to avoid penalties.
Employees – make sure you only pay what you owe!
The tax deducted from your salary is calculated by subtracting your annual tax free allowance from your salary and applying the appropriate tax rate to the difference. Most payroll systems are quite adept at calculating the tax due, but they all rely on the tax office to issue a correct code number to quantify your annual tax free allowance – this is the area where mistakes can be made and your tax bill increased.
We provide a payslip calculator on our website so you can calculate how much of your gross pay you will keep after tax and National Insurance deductions.
Employers – other points of interest
- Small businesses are able to pay their deductions quarterly rather than monthly – this can help with cash flow especially for new ventures.
- Employers have an additional National Insurance liability which is based on salary levels paid to employees. This is paid to HMRC each month/quarter with the tax and National Insurance deducted from employees’ gross salaries.
Basically, a PAYE code is made up of numbers and letters and includes personal allowances and any gross deductions. Providing that you are not on a ‘K’ code, the higher the number in your tax code, the less tax you will pay. If you have a ‘K’ code it means that the deductions in your code exceed your allowances and the higher the number, the more tax you will suffer. A few common errors are:
- Employers are sometimes slow in sending in details to the tax office when new employees start. This can delay the issue of a correct code number resulting in excessive tax deductions in the early months of employment.
- Employees who change their company cars for lower taxed models, or indeed cease using a company car … will continue to be taxed based on last tax year’s P11D Return information, until the tax office is informed of the new details. The tax office will sometimes seek to recover unpaid tax in previous years by reducing your tax code in the current year. These deductions should always be double checked to make sure the arrangement does not duplicate other payments that you may have made directly to HMRC.
The key to maintaining the correct code number is to notify the tax office immediately when changes occur.