Payroll Weston super Mare

Payroll / operating a PAYE scheme

A brief introduction to the Pay As You Earn Scheme:

The PAYE regime is the system of tax collection where employers deduct income tax and national insurance contributions (NICs) from an employees wage. This can be deducted weekly or monthly.

The PAYE system was originally designed to be a simple method of collecting tax at source, however over the years is has become increasingly more complicated with a variety of tax codes being introduced. Cases of employees paying too much or too little tax has become more common in recent years.

Employees will pay tax on wages and salaries, including bonuses and commission, tips, reimbursed expenses, benefits in kind, holiday and sick pay, maternity and paternity pay, redundancy payments (the first £30,000 is often tax free however) and some termination payments.

All businesses in the UK who pay workers must register as an employer for PAYE. Once registered the employer will need to operate a PAYE scheme and deduct the appropriate amount of tax and NIC from the employees wage. This will then need to be paid across to HMRC. The employer is required to give the employee a payslip (or similar) to confirm the amount of tax that has been deducted from an employees wage.

Each employee will be issued a tax code from HMRC. Tax codes are designed to give employees their individual tax-free allowance entitlement, which will then leave the balance of the wage to be taxed at the going rate. The employer will therefore use the PAYE tax code to calculate how much tax to deduct from the employee each week or month.

The main tax codes are:

BR – The BR tax code stands for basic rate. At present this is 20% and means all income will be taxed at this rate.

DO – The DO code is used by employers to deduct tax at the higher rate of tax, currently 40%.

K – The K code is used where an employees total allowances are less than total deductions (for example, where benefits in kind exceed personal allowances). The employer must deduct tax at more than the normal rate to take into account the tax due on the untaxed income.

T – The T code can be used in several different situations, the most common being where an employees personal allowance has been reduced because for example their income exceeds the income limits (the code would be OT).

NT – The NT code is used where the employer is required to deduct no tax from an employees wage.

L – The L code is the most common tax code, and is used for employees who only have their basic personal allowance available.

P – The P code is used when an employee receives a full personal allowance and they’re aged between 65-74 at some point in the tax year.

Y – The Y tax code is used where a tax payer receives a full personal allowance because they become 75 at some point in the tax year.

Further Information:

You can find out more about payroll and PAYE at https://www.gov.uk/business-tax/paye.

Alternatively, we have offer a professional payroll bureau services here at Hillmans Chartered Accountants. We can advise on all aspects of PAYE, including registering you as an employer and running the weekly or monthly payroll for you.

Please contact the Weston-super-Mare office on 01934 444100, or email info@hillmans.co.uk. We would be delighted to help!

Our website: http://www.hillmans.co.uk/payroll-and-cis  

Office location: Worle (Weston-super-Mare) Office
2 Laurel House, 1 Station Rd, Worle, Weston-super-Mare, North Somerset, BS22 6AR 
 

Our payroll bureau service includes:

- Setting you up as an employer with HMRC
- Online RTI (Real Time Information) Filing
- HMRC compliant payslips
- Payment to HMRC report telling you how much to pay to HMRC and when to pay
- Payroll software purchasing advice and set up

Call us on 01934 444 100 or send a message on the Contact Form

Hillmans cover all areas of Somerset from Taunton to Weston-super-Mare and all areas in between. Here's some useful information regarding Payroll and the PAYE Scheme.