PAYE (Pay As You Earn) is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees' pay as they earn it. The term 'employee' in this guide includes directors of limited companies.
As an employer, you'll have to deduct tax and NICs from your employees' pay each pay period and pay Employer's Class 1 NICs if they earn above a certain threshold. You pay these amounts to HMRC monthly or quarterly. If you don't send the correct amount, or if you send it in late, you may have to pay interest. After the end of the tax year you must send HMRC an Employer Annual Return (form P35 and forms P14). Almost all employers are required to send this online.
Pay as you earn (PAYE) is an regular and important task for employers, if you are an employer and paying wages and salaries over certain limit you have some responsibilities and duties to fulfil on regular basis.
Being an employer, you have certain obligations to the Taxman, HM Revenue. If you do not follow the law and procedures and ignore these obligations and duties, this attract penalties and interest towards your employment costs which will off course reduce your profit and cause unnecessary hassle!
Most penalties arise if you either:
Ø miss certain statutory deadlines for remitting tax and national insurance you have deducted from your employees and staff, or
Ø are late submitting your returns to the HM Revenue.
Unfortunately if you makes a late payment or forgets to send off a particular return and you will be penalized.
If you are providing some benefits to your employees, like company cars and health insurance etc you need to fulfill some more relevant requirements of law.
How we can help you.
If you would like to discuss PAYE or any payroll matter we are just a call away,
Call now at 0161 224 3510 or contact through our Contact us form. If you need a full payroll service then we are here to help.
Amin & Co Accountants is an independent accounting firm based in Bolton & Manchester who focus their accountancy skills specifically on small businesses and taxpayers needing a tax return in the UK.
We specialize in providing accountancy services, tax returns, payroll, bookkeeping, tax savings and tax advice to small businesses. We have number of customers including Sole Traders, Partnerships, Limited Companies and Personal Tax Payers
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