PAYE and payroll for employers

PAYE and Payroll for Employers

As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

You do not need to register for PAYE if none of your employees are paid £123 or more a week, get expenses and benefits, have another job or get a pension. However, you have to keep payroll records.

Payments and deductions:

When paying your employees through payroll you also need to make deductions for PAYE.

Payments to your employees:

Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay.

Deductions from their pay:

From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.

The key Payroll Year- end dates:

Date	Description
05-Apr	The 2023/24 tax year ends.
Before 6 April	Update all your employee payroll records. Update your payroll software.
06-Apr	The 2024/25 tax year begins.
19-Apr	This is the deadline for the final submission of the 2023/24 tax year.
22-Apr	This is the deadline for month 12 PAYE.
By 31 May	Your employees need to receive their P60s.
By 6 July	You need to report on expenses and benefits.
06-Jul	This is the deadline to submit your P11D and P11D(b) forms.
22-Jul	Payment of class 1A National Insurance contributions on Benefits in Kind must be with HMRC (the deadline is 19 July if you're not using digital systems).

Reporting to and paying HMRC:

If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday.

Your payroll software will work out how much tax and National Insurance you have to pay including an employer’s National Insurance contribution on each employee’s earnings above £175 a week.

You’ll need to send another report to claim any reduction on what you owe HMRC, for example, for statutory pay.

You’ll be able to view what you owe HMRC, based on your reports. You then have to pay HMRC, usually every month.

If you’re a small employer that expects to pay less than £1,500 a month, you can arrange to pay quarterly.

You may be exempt from reporting payroll online if:

Your PAYE bill may include:

Employee Income Tax deductions
Class 1 and 1B National Insurance
Class 1A National Insurance on termination awards and sporting testimonials
Student Loan repayments
Construction Industry Scheme (CIS) deductions
Your Apprenticeship Levy payments (starting from April 2017) if you, or employers you’re connected to, have an annual pay bill of more than £3 million

You pay your Class 1A National Insurance on work benefits that you give to your employees separately.

You must collect and keep records of:

Your records must show you’ve reported accurately, and you need to keep them for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure you’re paying the right amount of tax.

Payroll Softwares: If you decide to run payroll yourself, you need payroll software to report to HM Revenue and Customs (HMRC). The software will help you with tasks like:

You must get payroll software that reports PAYE information online, unless you’re exempt.

You should also consider which other features you need. For example, some software will not let you:

Please note- HMRC do not recommend one software product or service over another and is not responsible for any problems you have with software that you’ve bought.

Seek Professional Advice

Managing payroll and PAYE can be complex, but it’s essential for staying compliant with HMRC requirements. As an employer, understanding your responsibilities for deductions like Income Tax, National Insurance, and other contributions is crucial for maintaining smooth business operations.

At Tx Accountants Ltd, our team of payroll and tax experts can guide you through the entire process. We’ll help you set up and manage payroll efficiently, ensuring all necessary deductions are made and reports are submitted on time to HMRC. Whether you’re a small business or a more significant employer, we tailor our services to meet your specific needs and deadlines.

For more information on how we can support your payroll and PAYE needs, contact us at info@txaccountants.co.uk. Let us handle the paperwork so you can focus on running your business.

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