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Acceptance and rejection messages when you file online

Acceptance and rejection messages when you file online

After you file your Employer Annual Return online, you’ll get an acceptance or rejection message through the software or service you use. If you have provided HM Revenue & Customs (HMRC) with an email address, you’ll also get an email message. These messages are usually issued within a minute of filing, but it can take longer if your return covers a large number of employees. If your return is successful, you’ll get the following messages:…

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Advance funding for SMP

Advance funding for SMP

If you don’t have sufficient payroll deductions available to cover the Statutory Maternity Pay you’re entitled to recover, you may be able to apply for funding from HM Revenue & Customs. You can find more information in our related guide below. Get help with statutory payments funding

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Approved Payroll Giving Agencies

Approved Payroll Giving Agencies

All of the organisations listed below are approved and monitored by HM Revenue & Customs (HMRC) for the purposes of Payroll Giving. They can help you to promote Payroll Giving in the workplace, whether using a professional fundraising organisation, staff champions or a chosen charity. Achisomoch Aid Company Achisomoch Aid Company, which was established in 1979 and is based in North West London, offers a very special, speedy and personal service to clients whose employees…

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Avoiding employing someone illegally

Avoiding employing someone illegally

If you’re going to employ someone from outside the UK, you’ll need to make sure that they’re entitled to work here before they start working for you. The government has recently introduced checks that you must make on all new employees to safeguard you from employing someone illegally. Ensuring your workers are eligible to work in the UK Use our interactive tool to check if your workers are eligible to work in the UK. Find…

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Benefits of switching to electronic PAYE (Pay As You Earn) records

Benefits of switching to electronic PAYE (Pay As You Earn) records

If you’re currently completing paper P11s for your employees, HM Revenue & Customs (HMRC) recommends that you switch instead to keeping electronic payroll records by using either commercial payroll software or HMRC’s free P11 Calculator on the Employer CD-ROM. These software tools complete many of your payroll calculations automatically for you and they make filing your Employer Annual Return (P35 and P14s) online easier – a significant benefit now that almost all employers are now…

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Benefits of using non-paper methods

Benefits of using non-paper methods

Using non-paper methods for completing form P11, like HM Revenue & Customs’ (HMRC’s) free P11 Calculator on the Employer CD-ROM or commercial payroll software, can save you time and help reduce errors. Employers with 50 or more employees must file their Employer Annual Return (forms P14 and P35) online and using non-paper methods makes this much easier. Under government proposals all employers, regardless of the number of employees, will have to file these forms online…

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Benefits of using non-paper methods for the P11

Benefits of using non-paper methods for the P11

If using paper methods, bear in mind that there are more efficient ways of completing the P11 which will not only save you time but also help you meet important deadlines for filing PAYE online. These include: HM Revenue and Customs’ (HMRC’s) free P11 Calculator on their Employer CD-ROM commercial payroll software These will work out the figures for you automatically and make it easier for you to file your return online. From April 2010…

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Calculate SAP recovery manually

Calculate SAP recovery manually

How much Statutory Adoption Pay (SAP) you can recover depends on the total amount of employer’s and employees’ Class 1 National Insurance contributions (NICs) you pay in the ‘relevant tax year’. The ‘relevant tax year’ is the tax year immediately the tax year in which your employee’s ‘matching week’ falls (this being the week in which they were told they’d been matched with a child). You’ll find the total of your employer’s and employees’ NICs…

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Calculating and paying SSP

Calculating and paying SSP

You normally pay Statutory Sick Pay (SSP) in the same way as you pay wages – and at the same time. SSP payments have to be money. You can’t give something else instead, such as: payments in kind – eg goods board and lodging other services The easiest way to work out and record your SSP payments is to use commercial payroll software or HM Revenue & Customs’ SSP Calculator. Calculating and recovering Statutory Sick…

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Calculating and recovering SMP using an HMRC calculator

Calculating and recovering SMP using an HMRC calculator

HM Revenue & Customs’ (HMRC’s) Statutory Maternity Pay (SMP) calculator works out how much SMP you’ll have to pay and how much you can recover. It’s easy to use and does everything for you. You’ll find it: on the Employer CD-ROM on HMRC’s website Both the CD-Rom and the online version of the calculator work in the same way. They’ll work out for you: whether your employee is entitled to be paid SMP the amount…

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Calculating and recovering SSP using the SSP calculator

Calculating and recovering SSP using the SSP calculator

There are two Statutory Sick Pay (SSP) calculators – one for working out how much SSP to pay and one for checking if you can recover any SSP from HM Revenue & Customs (HMRC). You’ll find both of these on the Employer CD-ROM and the HMRC website. The calculator for working out SSP on the Employer CD-ROM gives you full guidance and includes links to E14 Employer Helpbook for Statutory Sick Pay. Check you’re using…

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Calculating directors National Insurance contributions

Calculating directors National Insurance contributions

Special rules apply when you’re working out National Insurance contributions (NICs) for company directors. Directors have an annual earnings period. This means that, although you can work out NICs for each pay period in the same way as for other employees, you’ll need to recalculate the NICs due on an annual basis at the end of the tax year – or when the person stops being a director if this happens during the tax year….

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Calculating SMP recovery manually

Calculating SMP recovery manually

How much Statutory Maternity Pay (SMP) you can recover depends on the total amount of employer’s and employees’ Class 1 National Insurance contributions (NICs) you pay in the ‘relevant tax year’. The ‘relevant tax year’ is the tax year immediately before the tax year in which the qualifying week falls – this being the 15th week before the baby is due. 4 July 2009 17 March 2009 2007-08 1 January 2010 15 September 2009 2008-09…

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Calculating SPP recovery manually

Calculating SPP recovery manually

How much Statutory Paternity Pay (SPP) you can recover depends on the total amount of employer’s and employees’ Class 1 National Insurance contributions (NICs) you pay in the ‘relevant tax year’. The ‘relevant tax year’ is the tax year immediately before the tax year in which the qualifying week falls – this being the 15th week before the baby is due. 4 July 2009 17 March 2009 2007-08 1 January 2010 15 September 2009 2008-09…

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Calculating SSP manually

Calculating SSP manually

To work out how much Statutory Sick Pay (SSP) to pay manually, you’ll need to: decide if there’s a ‘period of incapacity for work’ (PIW) – and if it’s linked to an earlier PIW work out the number of qualifying days in the PIW take into account any waiting days work out the number of qualifying days to be paid work out the amount of SSP payable for the qualifying days You can read more…

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Calculating SSP recovery manually

Calculating SSP recovery manually

To calculate Statutory Sick Pay (SSP) recovery manually you’ll need to: add up all the SSP you paid during the tax month work out your total Class 1 National Insurance contributions (NICs) liability for the tax month work out how much 13 per cent of the month’s NICs liability comes to see if the SSP you paid is more than 13 per cent of your NICs liability This method is called the Percentage Threshold Scheme….

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Changes to your employees tax code

Changes to your employees tax code

HM Revenue & Customs (HMRC) may tell you to change an employee’s tax code if their personal circumstances change. They’ll do this by sending you a form P6. They can’t tell you why the tax code’s changed because it’s confidential, but they’ll explain the reason to your employee when they tell them about the change. When you get a P6, you must use the new tax code from the next pay day onwards unless HMRC…

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Changing the terms of a salary sacrifice arrangement

Changing the terms of a salary sacrifice arrangement

In general, if you wish to allow your employee to ‘opt in’ and ‘opt out’ of a salary sacrifice arrangement, you’ll have to alter their contract with each change. This is because the employee’s contract must spell out clearly what their cash and non-cash entitlements are at any given time. If a salary sacrifice arrangement allows an employee to swap between cash earnings and a non-cash benefit whenever they like, then they haven’t really sacrificed…

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Check whether a balancing payment or refund is required

Check whether a balancing payment or refund is required

What to do Your completed Employer Annual Return shows you the total amount of PAYE (Pay As You Earn) tax and Class 1 National Insurance contributions (NICs) you should have paid to HM Revenue & Customs (HMRC) for the tax year. Compare this figure against the amount you actually paid to HMRC with your 12 monthly/4 quarterly tax/NICs payments: if the amount you have paid is higher than it should have been, HMRC will automatically…

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Class 1A National Insurance payment deadlines

Class 1A National Insurance payment deadlines

(BACS Direct Credit, internet or telephone banking, debit card over the internet, CHAPS, Paymaster, Bank Giro, Post Office) cleared payment must reach HM Revenue & Customs’ (HMRC) account no later than this date cleared payment must reach HMRC’s bank account by the last bank working day before 22 July cheque must reach the HMRC Accounts Office no later than this date cheque must reach the HMRC Accounts Office by the last bank working day before…

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Class 1A NICs: expenses and benefits

Class 1B NICs: PAYE Settlement Agreements (PSAs)

Commercial payroll software

Commercial payroll software

With commercial software, you can choose from a wide range of packages. Features may differ from package to package, so it’s important to make sure you choose one with the functionality you require. HM Revenue & Customs (HMRC) strongly recommends choosing commercial software that meets its Payroll Standard. Payroll Standard accreditation means that software meets HMRC’s minimum standards and: provides a full range of payroll functions can file your Employer Annual Return online lets you…

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Common errors to avoid on form P35

Common errors to avoid on form P35

Box 3, ‘Total National Insurance contributions’ Add together all of the ‘Total of employee’s and employer’s contributions payable’ (Box 1e) on your P14s for all of your employees. You should enter this total in Box 3 on form P35. Box 12, ‘Statutory Sick Pay (SSP) recovered’ Enter the amount you are entitled to recover under the Percentage Threshold Scheme (PTS), not the total SSP paid to your employees. For more information on the PTS, read…

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Common errors to avoid on form P45

Common errors to avoid on form P45

Form P45 (all parts) – employee’s address You have to include the second line of your employee’s address. This information isn’t needed for other PAYE forms like the P14, so it might be missing from your payroll system or it might contain invalid characters. Form P45 (Part 1 – employee leaving) – paying an employee after they have left Don’t file a second form P45 if you pay an employee after they have left. You…

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Company cars: advisory fuel rates

Complete and file your Employer Annual Return

Complete and file your Employer Annual Return

What to do You must complete and file an Employer Annual Return if you were required to maintain a form P11 or equivalent payroll record for at least one employee during the tax year – whether or not you had to make any deductions of PAYE (Pay As You Earn) or National Insurance contributions from them. If this doesn’t apply to you, see the section in this guide Notify HMRC if you’re not required to…

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Completing form P14 when a week 53 payment has been made

Correcting errors after you have filed your return

Correcting errors after you have filed your return

If you discover a mistake in your Employer Annual Return after you have filed it, you will need to file an amended version of the form containing the mistake. If the mistake is on a form P14, you must also send an amended form P35. Any amended forms you send to HM Revenue & Customs (HMRC) should contain only the amended information – whether this is a positive or negative amount. Do not file a…

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Correcting errors on your Employer Annual Return

Dealing with tax code changes

Dealing with tax code changes

If you use the simplified scheme you don’t need to use a tax code to work out your employee’s free pay. This is done for you on form P12. If your employee asks you to change their code tell them to get in touch with their tax office. You shouldn’t change the entries for the tax code or the free pay on form P12. HM Revenue & Customs (HMRC) will send you a new P12…

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Electronic payroll systems – benefits and options

Electronic payroll systems – benefits and options

Using an electronic payroll system offers a number of significant advantages over keeping your records on paper versions of form P11. It: saves time – you don’t need to use HM Revenue & Customs’ (HMRC’s) tax/National Insurance contributions tables reduces errors – calculations are completed automatically for you prepares you to file online – almost all employers are now required to file their Employer Annual Return (P35 and P14s) online There are two main electronic…

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Employee Class 1 NICs rates and category letters

Employee Class 1 NICs rates and category letters

Different categories of employee pay Class 1 National Insurance contributions (NICs) at different rates. This is reflected in a range of different NICs ‘category letters’. The tables below outline which letters apply to which employees. One of the factors that determines which letter applies to an employee is whether or not they’re a member of a contracted-out occupational pension scheme. (These employees pay NICs at a lower rate because they have opted out of the…

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Employee doesnt have a National Insurance number

Employee doesnt have a National Insurance number

HM Revenue & Customs (HMRC) needs to know your employee’s National Insurance number so that their National Insurance account can be kept up to date and their entitlement to state benefits like the State Pension can be protected. National Insurance numbers consist of two letters, followed by six numbers, followed by one letter, A, B, C or D. No other format is acceptable. It will look something like this: QQ123456A. (This is an example only…

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Employee doesnt have P45 – completing form P46

Employee doesnt have P45 – completing form P46

There could be several reasons for your new employee not having a P45, including: it’s been lost it’s your employee’s first job they are continuing with another job as well as working for you your employee is a student working for you solely during their holidays If your employee doesn’t give you a form P45 you and your employee must complete a form P46 unless either of the following applies: your employee is a student…

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Employee has more than one job

Employee has more than one job

If one of your employees has more than one job, this may affect the way you work out the National Insurance contributions (NICs) due on their pay. The changes you may need to make are outlined in the sections below. Note that an employee having more than one job does not affect deductions of PAYE tax. The employee’s jobs are with different employers If one of your employees has another job with a different employer,…

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Employee previously claiming Jobseekers Allowance

Employee vehicles: mileage payments for business travel

Employee vehicles: mileage payments for business travel

For tax purposes: 40 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile. For National Insurance Contributions (NICs) purposes: 40 pence for all business miles 24 pence for both tax and NICs purposes and for all business miles 24 pence for both tax and NICs purposes and for all business miles Find out more about mileage payment for business travel in employee’s own vehicles in the…

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Employees coming to the UK from abroad

Employees coming to the UK from abroad

While it is usually the case that the normal PAYE tax and National Insurance contributions (NICs) rules and procedures apply for employees who come to the UK from abroad, there are circumstances in which exceptions apply. This level explains what these circumstances are, and what you need to do if they apply to your business. Eligibility to work in the UK The main focus of this guide is on the PAYE tax and NICs procedures…

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Employer Annual Return records

Employer Annual Return records

You don’t need to keep a copy of the Employer Annual Return (P35 and P14s). But you do need to keep a copy of the records you used to prepare and file your returns so that you are able to provide supporting evidence if HM Revenue & Customs (HMRC) asks for it. If you file using the HMRC Online Returns and Forms service, electronic records are automatically kept in line with normal PAYE record keeping…

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Employers responsibility for PAYE

Employers responsibility for PAYE

As an employer you have a legal obligation to operate PAYE (Pay As You Earn) on the payments you make to your employees if their earnings reach the National Insurance Lower Earnings Limit. For the tax year 2013-14 this is 109 a week, 473 a month or 5,668 a year. You use the employee’s tax code and National Insurance category letter to work out how much Income Tax and National Insurance contributions (NICs) to deduct…

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End of year tasks – completing the Employer Annual Return

End of year tasks – completing the Employer Annual Return

At the end of the tax year you’ll need to complete an Employer Annual Return, form P37. This provides a summary of the information on the P12s you have completed for the tax year. The deadline for filing your annual return is 19 May. You can submit form P37 to HM Revenue & Customs (HMRC) either online or on paper – unlike most other employers, if you’re entitled to use the simplified scheme then you’re…

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Enforcement and penalties

Enforcement and penalties

HM Revenue & Customs (HMRC) enforces the national minimum wage (NMW). Under a new system from 6 April 2009, if HMRC finds you have underpaid the NMW they will issue a notice of underpayment. This will show the arrears you must pay to your workers and the penalty you must pay to HMRC. The penalty is 50 per cent of the total underpayment that has occurred from 6 April 2009. This figure will be shown…

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Entering employee information

Entering employee information

First name Only enter the following characters in the field for your employee’s first name: A-Z letters (upper or lower case) hyphens (-) apostrophes (‘) The first character of this field must be an A-Z letter – not a space, comma, full stop, hyphen or apostrophe. Surname Don’t include extra information in this field, such as ‘staff’ or ‘temp’. National Insurance number The correct format for an employee’s Natioanl Insurance number is two letters, followed…

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Entering employee information >> Common Errors For P45 And P46 Online

Entering employee information >> Common Errors For P45 And P46 Online

First name Only enter the following characters in the field for your employee’s first name: A-Z letters (upper or lower case) hyphens (-) apostrophes (‘) The first character of this field must be an A-Z letter – not a space, comma, full stop, hyphen or apostrophe. Surname Don’t include extra information in this field, such as ‘staff’ or ‘temp’. National Insurance number The correct format for an employee’s National Insurance number is two letters followed…

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Example – working out National Insurance contributions using tables

Example – working out National Insurance contributions using tables

If, for example, your employee’s National Insurance contributions (NICs) category letter is A, you would use booklet CA38 as follows: turn to table in the left hand column of the table “Employee’s Earnings up to and including the Upper Earnings Limit (UEL)” look up the employee’s gross pay if the exact amount isn’t shown in the table, use the next smaller figure – see the following examples Important – if your employee’s earning are the…

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Expenses and benefits

Expenses and benefits

Here are some links to HMRC booklets on expenses and benefits Publication name and reference When to use 480: Expenses and benefits a tax guide (PDF 868K) 6 April 2012 to 5 April 2013 490: Employee travel a tax and NICs guide (PDF 210K) 6 April 2012 to 5 April 2013 CWG5: Class 1A NICs on benefits in kind (PDF 473K) 6 April 2012 to 5 April 2013 CA33: Class 1A NICs on car and…

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Filing the right forms

Filing the right forms

You can only use the PAYE Online service to file your PAYE forms. To file any other HM Revenue & Customs (HMRC) forms online, such as VAT or Self Assessment Returns, you’ll need to enrol and log in to the relevant online services separately. Do this on the Online Services homepage. Make sure that you only file each form once – don’t submit the same form both on paper and online.

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Filing the right forms >> Common Errors For P45 And P46 Online

Filing the right forms >> Common Errors For P45 And P46 Online

You can only use the PAYE online service to file your PAYE forms. To file any other HM Revenue & Customs forms online, such as VAT or Self Assessment returns, you’ll need to enrol and log in to the relevant online services separately. Do this in the online services homepage. Make sure also that you only file each form once – don’t submit the same form both online and on paper.

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Filing your Employer Annual Return (P35 and P14) online

Filing your Employer Annual Return (P35 and P14) online

When to file Your Employer Annual Return must reach HM Revenue & Customs (HMRC) by 19 May after the tax year to which the return applies. You may be charged a penalty if your return is received later than this. Remember, almost all employers are now required to file their Employer Annual Return online. What happens when you have filed your Employer Annual Return As soon as HMRC receives your return online, it will be…

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Finalising form P11 using commercial software or the P11 Calculator

Finalising form P11 using commercial software or the P11 Calculator

If you manage your payroll using commercial software or HM Revenue & Customs (HMRC’s) free P11 Calculator on the Employer CD-ROM, these will automatically add up the end-of-year payroll figures you need for your Employer Annual Return, saving you time and reducing the likelihood of error. Using software also simplifies the process of filing the annual return online, which almost all employers must now do: most commercial software will seamlessly transfer the figures from your…

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First employee – registering as an employer

First employee – registering as an employer

If this is your first employee and their earnings meet certain thresholds, or they have another job or a pension you’ll need to register as an employer and operate PAYE. To find out more and how to do this read our related guide below. Register as an employer  However, if you’re taking on someone to work for you in your home – such as a nanny, carer, cook, gardener or chauffeur – please first read…

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Form filling and record keeping

Form filling and record keeping

Form P11 You must update a form P11 or equivalent record for each separate pension that you pay – including multiple pensions paid separately to a single individual. For more information on completing form P11, follow the link below. If you start paying a pension when one of your employees retires, then you can continue to use the existing form P11 that you have been using to record their employment income – you don’t need…

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Free of tax payments and true gross pay

Free of tax payments and true gross pay

Paying an employee on a free of tax basis means committing to paying them a certain amount of take-home pay. For example, you might agree to pay an employee £1,000 free of tax each month. This means that regardless of changes to the allowances, rates or thresholds that apply to PAYE tax and National Insurance contributions (NICs), your employee will receive the sum of £1,000 each month. It is your responsibility to ensure that all…

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Get your in-year filing right

Get your in-year filing right

If you use commercial software to file an in-year form online, HM Revenue & Customs’ (HMRC’s) validation service will send your software an acknowledgement for successful submissions or an error message for those that fail. When a submission fails, you must correct the form and file it again. If you use HMRC’s ‘Online Return and Forms – PAYE’ service to file an in-year form, any errors will be highlighted for you to correct before you…

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Getting started with PAYE

Getting started with PAYE

When you pay your employee for the first time you must check whether you need to operate PAYE (Pay As You Earn) and register as an employer with HM Revenue & Customs (HMRC). Once you have registered, you will be given the option of receiving a New Employer pack which contains the Employer’s CD-ROM. This CD-ROM contains electronic calculators as well as all the forms and information you’ll need to operate PAYE. If you employ…

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Getting started with the P11 Calculator

Getting started with the P11 Calculator

The P11 Calculator is currently only available on the Employer CD-ROM. HM Revenue & Customs (HMRC) will send this to you when you register as a new employer. If you’re already an employer, they’ll send you the latest CD-ROM as part of the Employer Annual Pack. You may also be sent an updated CD-ROM which will reflect any changes announced in the Chancellor’s spring Budget Statement. You can order a copy of the Employer CD-ROM…

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Give a form P60 to each relevant employee

Give a form P60 to each relevant employee

What to do You must provide a form P60 to each employee who was working for you on the last day of the tax year (5 April) and for whom you were required to maintain a form P11 or equivalent payroll record. The P60 summarises the employee’s total pay and deductions for the year. You can complete your P60s in two ways: electronically, by printing out P60s created (and typically automatically completed for you) by…

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Help and advice

Help and advice

Follow the links below to find out more about Statutory Paternity Pay (SPP). Statutory Paternity Pay: an overview Download E19 Employer Helpbook for Statutory Paternity Pay from the HM Revenue & Customs (HMRC) website (PDF, 270K) – Opens in a new window. Find information and frequently asked questions on SPP on the HMRC website – Opens in a new window. If you still can’t find what you need, you can ask a question through HMRC’s email query service….

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Help and advice >> Finalising Your Payroll

Help and advice >> Finalising Your Payroll

You can find quick answers to the most commonly asked questions about finishing the tax year by following the link below. Read frequently asked questions about finishing the tax year on the HM Revenue & Customs (HMRC) website – Opens in a new window. If you still can’t find the information you need, you can ask a question through HMRC’s email query service. Use HMRC’s email query service to send a question about end-of-year PAYE.

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Help and advice >> New Employees

Help and advice >> New Employees

For more information about dealing with forms P45 and P46 when taking on a new employee, follow the links below for answers to common questions. Find common questions about form P45 on the HM Revenue & Customs (HMRC) website – Opens in a new window. Find common questions about form P46 on the HMRC website – Opens in a new window. If you still can’t find the information you need, you can ask a question…

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Help and advice >> Statutory Pay

Help and advice >> Statutory Pay

Follow the links below to find out more about Statutory Paternity Pay (SPP). Statutory Paternity Pay: an overview  Download E19 Employer Helpbook for Statutory Paternity Pay from the HM Revenue & Customs (HMRC) website (PDF, 270K) – Opens in a new window. Find information and frequently asked questions on SPP on the HMRC website – Opens in a new window. If you still can’t find what you need, you can ask a question through HMRC’s email query service….

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Help and advice >> When An Employee Leaves Or Retires

Help and advice >> When An Employee Leaves Or Retires

You can find quick answers to the most commonly asked questions about completing form P45 by following the link below. Quick answers to common questions on completing form P45 on the HM Revenue & Customs (HMRC) website – Opens in a new window. If you still can’t find the information you need, you can ask a question through the HMRC email query service. Use HMRC’s email query service to send a question about completing form…

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Help and advice on Adoption Pay

Help and advice on Adoption Pay

Follow the links below to find out more about Statutory Adoption Pay (SAP). Statutory Adoption Pay: an overview Read E16 Employer Helpbook for Statutory Adoption Pay on the HM Revenue & Customs (HMRC) website – Opens in a new window. Find frequently asked questions on SAP on the HMRC website – Opens in a new window. If you still can’t find what you need, you can ask a question through HMRC’s email query service. Use…

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Help and advice on Statutory Adoption Pay

Help and advice on Statutory Adoption Pay

You can find quick answers to the most commonly asked questions about Statutory Adoption Pay (SAP) by following the link below. Find quick answers to common questions on SAP on the HM Revenue & Customs (HMRC) website – Opens in a new window. If you still can’t find what you need, you can ask a question through HMRC’s email query service. Use HMRC’s email query service to send a question about SAP. Alternatively you get…

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Help and advice on Statutory Maternity Pay

Help and advice on Statutory Maternity Pay

Follow the links below to find out more about Statutory Maternity Pay (SMP). Statutory Maternity Pay: an overview  Find E15 Employer Helpbook for Statutory Maternity Pay on the HM Revenue & Customs (HMRC) website – Opens in a new window. Find frequently asked questions on SMP on the HMRC website – Opens in a new window. Use HMRC’s email query service to send a question about SMP. Alternatively you get advice from HMRC Employer Helpline…

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Help and advice on Statutory Paternity Pay

Help and advice on Statutory Paternity Pay

You can find quick answers to the most commonly asked questions about Statutory Paternity Pay (SPP) by following the link below. Find quick answers to common questions on SPP on the HM Revenue & Customs (HMRC) website – Opens in a new window. If you still can’t find what you need, you can ask a question through the HMRC email query service. Use HMRC’s email query service to send a question about SPP. Alternatively you…

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Help and advice on Statutory Sick Pay

Help and advice on Statutory Sick Pay

You’ll find a glossary of Statutory Sick Pay (SSP) terms in the E14, Employer Helpbook for Statutory Sick Pay. You can also find quick answers to the most commonly asked questions about SSP by following the link below. Find quick answers to common questions on SSP on the HM Revenue & Customs (HMRC) website – Opens in a new window. If you can’t find what you need – and have already checked the related guide…

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HMRCs P11 Calculator

HMRCs P11 Calculator

The P11 Calculator on the HM Revenue & Customs (HMRC) Employer CD-ROM provides a free and convenient way for smaller employers to maintain their payroll records in an electronic format. It also makes it easy for many smaller employers to meet the requirement to file their Employer Annual Return online. However, it’s important to note that the P11 Calculator isn’t a full payroll software system and won’t always offer the same flexibility as commercial software…

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How and when to apply

How and when to apply

To apply for a PAYE Settlement Agreement (PSA), you should write to your HM Revenue & Customs (HMRC) office explaining that you want one and describing the expenses and benefits you’d like the PSA to cover. Once HMRC has agreed the expenses and benefits to be covered by your PSA, they will authorise the agreement and send you a signed form P626. You can apply for a PSA at any time, but the timing of…

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How many hours has your worker worked?

How many hours has your worker worked?

Every worker who’s entitled to the national minimum wage (NMW) must be paid at least their NMW rate on average for every hour worked in each pay reference period. (The pay reference period is the interval at which you pay them – such as weekly or monthly, but it cannot be longer than a calendar month.) This means that to work out how much you’re required to pay a worker, you need to calculate how…

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How Payroll Giving works

How Payroll Giving works

Payroll Giving lets your employees (and people who receive a company or personal pension) make donations to charities of their choice directly from their pay – providing they pay tax through PAYE (Pay As You Earn). They can donate as much or as little as they want. If you decide to run a Payroll Giving Scheme for your employees, you’ll make regular deductions from their pay through your payroll system. You deduct the amount an…

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How to calculate PAYE tax for employees working abroad

How to calculate PAYE tax for employees working abroad

The basic rule is that you must continue to calculate and deduct PAYE tax in the normal way from all your payments to any of your employees who work abroad. When your employee goes abroad, you’ll need to give them a letter including the following details: the date they went abroad to work their gross pay from the start of the tax year to the date when they were sent abroad the tax deducted from…

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How to calculate the student loan deduction

How to calculate the student loan deduction

How you go about this will depend on whether you operate payroll using software or manually. Using payroll software is quick and easy and reduces error. If you use commercial payroll software Commercial payroll software will usually calculate any student loan deductions automatically, along with PAYE (Pay As You Earn) and National Insurance contributions (NICs) deductions. Simply follow the software instructions. If you use HMRC’s P11 Calculator If you use HM Revenue & Customs’ (HMRC’s)…

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How to determine a workers employment status

How to determine a workers employment status

In most cases, employment status is straightforward. As a general rule, a worker is: employed if they work for you and don’t have the risks of running a business self-employed if they’re in business on their own account and are responsible for the success or failure of their business The sections below contain a series of further pointers that will help you determine a worker’s employment status. And you can also use HM Revenue &…

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How to rectify incorrect deductions of PAYE tax or NICs

How to rectify incorrect deductions of PAYE tax or NICs

If you have deducted too much PAYE tax or National Insurance contributions (NICs) from your employee, simply refund the extra amount on their next payday. If you have deducted too little, contact the HMRC Employer Helpline on Tel 08457 143 143. In general it is up to you to bear the cost of your mistake, but if it was made in good faith HM Revenue & Customs (HMRC) may permit you to transfer the cost to…

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How to register

How to register

Most employers can register with HM Revenue & Customs (HMRC) by telephone or internet. Registering by telephone or email In most cases the easiest way to register as an employer is to use the HMRC website registration tool to generate an email giving HMRC all the information they need from you. However, this tool won’t work if your business is in one of the following three categories, in which case you’ll have to register by…

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How to treat incentive awards for PAYE tax and National Insurance contributions purposes

How to treat incentive awards for PAYE tax and National Insurance contributions purposes

The steps you need to take when one of your employees receives an incentive award depend on the following two factors: whether the award is in cash (including vouchers exchangeable for cash) whether the award is made directly by you, or by another business An example of another business providing an incentive award would be a car manufacturer making performance related awards to salespersons employed at dealerships. Expenses and benefits for employers

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If a pensioner dies

If a pensioner dies

If someone to whom you have been paying a pension dies, you must complete a form P45. If you’re completing an electronic version of form P45, mark the relevant box to indicate that the pensioner has died, and then file Part 1 online to HM Revenue & Customs (HMRC). If your software automatically produces Parts 1A, 2 and 3 of the form you should destroy them – there is no need to send them to…

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If an employee dies

If an employee dies

If an employee dies, you must complete a form P45. If you are completing an electronic version of form P45, mark the relevant box to indicate that the employee has died, and then file Part 1 online to HM Revenue & Customs (HMRC). If your software automatically produces Parts 1A, 2 and 3 of the form you should destroy them – there is no need to send them to HMRC. If you are completing a…

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If an employee disagrees with your SAP decision

If an employee disagrees with your SAP decision

You may determine that your employee isn’t entitled to Statutory Adoption Pay (SAP). You must explain the reason for your decision to your employee. You can do this using form SAP1. Make a copy of the evidence from the adoption agency that your employee gave you and give the original back to your employee with form SAP1. If your employee doesn’t agree with you, they have the right to ask you for a written statement…

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If an employee disagrees with your SMP decision

If an employee disagrees with your SMP decision

You may decide that your employee isn’t entitled to Statutory Maternity Pay (SMP). You must explain the reason for your decision to your employee. You can do this using form SMP1. Make a copy of the evidence of pregnancy – form MAT B1 – and give the original back to your employee. If your employee doesn’t agree with you, they’ve got the right to ask you for a written statement showing: the days – if…

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If an employee doesnt qualify for SAP

If an employee doesnt qualify for SMP

If an employee doesnt qualify for SMP

If your employee doesn’t qualify for Statutory Maternity Pay (SMP) you must give them form SMP1 “Why I cannot pay you SMP”. They might be able to claim Maternity Allowance instead. They can find out more about claiming Maternity Allowance from the Department for Work and Pensions. Find information for employees on Maternity Allowance on the Directgov website – Opens in a new window.

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If you award a pension following work-related disability

If you award a pension following work-related disability

If a pension has been awarded to an employee because of a work-related disability and if payments are made from a scheme registered with HM Revenue & Customs (HMRC) then: you must deduct PAYE tax from any payments you make from the scheme you don’t need to deduct or pay any Class 1 National Insurance contributions on the payments If the payments are made from any other source including an unregistered pension scheme, then the…

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If you cant trace a pension recipient

If you cant trace a pension recipient

If you have to suspend your pension payments to a pension recipient because you can’t locate them, you should inform HM Revenue & Customs (HMRC). If suspending your pension payments involves cancelling the recipient’s pension until you relocate them, then send HMRC a form P45 Part 1 entering ‘nil’ in the pay and tax boxes. (Remember you must file form P45 online if you have 50 or more employees.) If you subsequently trace the pension…

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If you have stopped employing anyone but plan this to be temporary

If you have stopped employing anyone but plan this to be temporary

If you face a temporary gap in which you will owe no PAYE tax or National Insurance contributions (NICs), then the steps you must take depend on the length of the gap. There are numerous possible reasons for this kind of gap in PAYE liabilities – for example, seasonal businesses often employ no-one during the quiet months of the year. Gaps of less than a year If you expect that your gap in liabilities will…

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If you no longer employ anyone and dont plan to do so again

If you no longer employ anyone and dont plan to do so again

If your business no longer employs anyone then you should contact HM Revenue & Customs (HMRC). In many instances they will close down your PAYE scheme. However, if your business is a limited company, they will ask you for additional information before deciding how to proceed. You must pay HMRC any PAYE tax and National Insurance contributions that you owe within 14 days (17 days if you pay by electronic means) of the last tax…

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If you provide or change an employees company car

If you still complete form P11 on paper

If you still complete form P11 on paper

To finalise an employee’s paper form P11 at the end of the tax year, you need to complete the following tasks: add up National Insurance contributions (NICs) entries in columns 1a to 1f record the employee’s Scheme Contracted-out Number – where relevant add up any statutory payments/student loan deductions in columns 1g-1k complete the ‘Pay and Tax totals’ boxes – columns 3 and 6 at the bottom of the P11 Go to form P11 on…

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If your claim relates to a previous year

If your claim relates to a previous year

If your claim relates to a previous tax year you cannot apply for funding online. The procedure to follow depends on whether or not you have already made the statutory payment to your employee. If you have already made the payment to your employee To claim funding in this circumstance, complete a form SP32 and send it to the following address: HM Revenue & Customs National Insurance Contributions Office CORT Multi-erroneous Room BP1001 Benton Park…

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If your claim relates to the current tax year

If your claim relates to the current tax year

The easiest way to claim for the current tax year is to use HM Revenue & Customs’ (HMRC’s) online forms. But you can also apply by post or fax. Apply online It’s very important that you have all the relevant information to hand before you start to complete the online application, as you can’t save your progress once you have started and return to it at a later time. Choose the relevant online form you…

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If your claim spans both the current and next tax years

If your claim spans both the current and next tax years

If your claim relates to a period that begins in this tax year and runs into the following one, you can still claim either online or by post or fax. It’s important that when applying you include two sets of starting and finishing dates for the claim – one for each tax year. The online form for claims relating to maternity pay allows you to submit the dates for both tax years on the same…

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If your employee stops working for you

If your employee stops working for you

You are still required to pay Statutory Maternity Pay (SMP) to your employee as usual if either of the following occurs: she stops working for you before you have started paying SMP but after the start of the 15th week before the baby’s due date she stops working for you after you have started paying SMP to her This applies regardless of whether the employee decides voluntarily to stop working for you or whether you…

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If your employee stops working for you >> Statutory Pay

If your employee stops working for you >> Statutory Pay

These rules apply regardless of whether an employee decides voluntarily to stop working for you or whether you have dismissed them. UK adoptions If you have already started payment of Statutory Adoption Pay (SAP) when an employee’s employment with you ends, you must continue to pay it unless the person starts work for another employer. If the employee’s employment with you ends before your payment of SAP to them begins, then you must still pay…

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Implementing changes announced during the tax year

Implementing changes announced during the tax year

There are sometimes changes to make to your employees’ records after the start of the new tax year as a result of the Chancellor’s spring Budget statement. If so, HM Revenue & Customs (HMRC) will send you an update on form P7X and will provide any necessary updates to your Employer CD-ROM. You’ll need to follow the instructions on form P7X and apply these changes from the date HMRC informs you of. For example the…

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Important reference numbers for contracted-out pension schemes

Important reference numbers for contracted-out pension schemes

When you set up an occupational contracted-out scheme, HM Revenue & Customs (HMRC) will send you an Employer Contracting-out Number, which you will need to enter on form P35 when completing your Employer Annual Return (form P35 and forms P14) at the end of the tax year. HMRC also assigns a Scheme Contracted-out Number (SCON) to each occupational contracted-out pension scheme. When completing your Employer Annual Return, the SCON must be entered on the form…

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Important updates and changes

Important updates and changes >> File In Year Forms Online

Important updates and changes >> File In Year Forms Online

50 or more employees? You must file in-year forms online If you have 50 or more employees, you must now file your in-year forms online. This became a requirement in April 2009. You can find more information in the page in this guide on deadlines for starting to file online. Two new forms introduced from April 2009 HM Revenue & Customs (HMRC) introduced two new forms on 6 April 2009: Use form P46 (Expat) for…

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Important updates and changes >> Paye For Pension And Annuity Payments

Incorrect PAYE tax and NICs deductions in a previous tax year

Incorrect PAYE tax and NICs deductions in a previous tax year

If you discover that you deducted the wrong amount of PAYE tax or National Insurance contributions (NICs) from an employee in a previous tax year, you should contact HM Revenue & Customs (HMRC) for advice about how to proceed. Call the HMRC Employer Helpline on Tel 08457 143 143 open from 08.00 to 20.00 Monday to Friday and 08.00 to 17.00 Saturday and Sunday.

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Information for agents

Information for agents

If you’re claiming the tax-free payment online on behalf of clients: make sure that each client has received confirmation from HM Revenue & Customs (HMRC) that they’ve been awarded the payment make sure that the clients have no outstanding Employer Annual Returns – you can claim, but payments won’t be issued until your client’s outstanding returns have been submitted you can make an online claim for up to ten clients on a single form if…

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Information youll need to register

Information youll need to register

In order to register as an employer you will need to have the following information to hand. HM Revenue & Customs (HMRC) requires the following : your name and address and contact telephone number a contact email address if you’re registering by email your National Insurance number your Unique Taxpayer Reference (UTR) the name of your business the type of business you run its trading address HMRC will ask for the following : the date…

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Information youll need to set up the P11

Information youll need to set up the P11

You’ll need the following to set up and maintain an employee’s form P11 or equivalent record. Employer and employee details You’ll need: the name of your HM Revenue & Customs (HMRC) office your employer PAYE reference employee start date your employee’s first two forenames and surname your employee’s National Insurance (NI) number your employee’s date of birth your employee’s works or payroll number, if applicable your employee’s gender your employee’s tax code (from P45/P46) whether…

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Information youll need to set up the P11 >> Completing The Paper Form P11

Information youll need to set up the P11 >> Completing The Paper Form P11

You’ll need to set up the P11 Deductions Working Sheet with basic employee and employer details. Enter the details in the boxes at the top of the P11 as follows: Box A – employer name (the name of your business). Box B – the name of your HM Revenue & Customs (HMRC) Office, and your employer PAYE (Pay As You Earn) reference. You’ll find these on the letter HMRC sent you when you registered as…

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Information youll need to work out SAP

Information youll need to work out SAP

Whichever method you use to work out Statutory Adoption Pay (SAP) and recovery of SAP you’ll need to gather together the same information. Information needed to calculate SAP Before you can start to calculate your employee’s SAP, you’ll need: a copy of the matching certificate – or in the case of an adoption from abroad, a copy of the Official Notification from the relevant UK authority that they have agreed that your employee is suitable…

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Information youll need to work out SMP

Information youll need to work out SMP

Whichever method you use to work out Statutory Maternity Pay (SMP) and recovery of SMP you’ll need to gather together the same information. Information needed to calculate SMP Before you can start to calculate your employee’s SMP you’ll need: the date the baby’s due – from your employee’s MATB1 form your employee’s intended date for starting her maternity leave, if she’s given you one your employee’s gross pay and the dates she was paid in…

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Is your employee entitled to SSP?

Is your employee entitled to SSP?

You only need to pay Statutory Sick Pay (SSP) to an employee if they meet the qualifying conditions set out below. Qualifying conditions An employee must meet all the following conditions to get SSP: They must be your employee – and they’ll need to have done some work under their employment contract before going off sick. The days they’re off sick must make up part of a ‘period of incapacity for work’ (PIW) – explained…

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Issuing pay statements

Issuing pay statements

By law, every pay day you must give your employee a written record of pay and deductions, including: ‘gross pay’ – before the deduction of tax or National Insurance contributions (NICs) and any other deductions employee’s Class 1 NICs deducted tax deducted Depending on the employee’s circumstances you may also need to include other payments and deductions on the pay slip. The later sections of this guide tell you what these might be but we…

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Key steps in the SSP process

Key steps in the SSP process

There are several important steps in the Statutory Sick Pay (SSP) process. They are: Working out whether your employee is eligible for SSP and that they have met all the qualifying conditions. Checking the employee has told you they’re sick within the required time limits. Checking the employee has given proper evidence of their incapacity. Make sure your employees know what evidence is needed – including when they can self-certify and when they need a…

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Lengthening the interval between paydays

Lengthening the interval between paydays

Dealing with PAYE and National Insurance contributions (NICs) when lengthening your payment interval is quite straightforward. PAYE changes You work out PAYE on the basis of the new earnings period from the first payment after the change. NICs changes For NICs purposes you’ll need to check whether your last payment to an employee under your old shorter interval falls in the first of your new, longer earnings periods. If it does, then the NICs from…

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List of National Insurance number prefixes

List of National Insurance number prefixes

It’s important to get your employees’ National Insurance numbers right when filing PAYE forms online because HM Revenue & Customs (HMRC) will reject forms containing invalid numbers. The table below lists all the valid National Insurance prefixes – the two letters at the beginning of an employee’s National Insurance number. If the National Isurance number you have for an employee contains a prefix not listed in this table, then you should use form CA6855 to find…

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List of valid National Insurance number prefixes

List of valid National Insurance number prefixes

It’s important to get your employees’ National Insurance numbers right when filing PAYE forms online because HM Revenue & Customs (HMRC) will reject forms containing invalid numbers. The table below lists all the valid National Insurance prefixes – the two letters at the beginning of an employee’s National Insurance number. If the National Insurance number you have for an employee contains a prefix not listed in this table, then you should use form CA6855 to…

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Making a trivial commutation payment

Making a trivial commutation payment

A trivial commutation pension payment is a one-off lump sum that pays off a pension in full, so that there’s no need to make the usual weekly, monthly or annual payments. Typically, these one-off payments are used if the regular payments would be very small. If you have already made standard payments from the pension before making the trivial commutation payment: for PAYE tax and National Insurance contributions (NICs) purposes, treat the trivial commutation payment…

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Making PAYE tax and NICs deductions from non-cash payments

Making PAYE tax and NICs deductions from non-cash payments

Once you have arrived at a valuation for a readily convertible asset (RCA) paid to your employee, you can calculate the PAYE tax and National Insurance contributions (NICs) that are owed. Of course, you won’t be able to make PAYE tax and NICs deductions direct from the non-cash payment. Instead, you must recover the PAYE tax and NICs due on the non-cash payment from any payments in cash (wages, salary, commission, fees, etc) that you…

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Making payments that are free of both PAYE tax and NICs

Making payments that are free of PAYE tax but not of NICs

Making payments that are free of PAYE tax but not of NICs

If you agree to pay an employee free of tax only, the procedures to follow depend on whether you pay all or part of their earnings in this way. Unfortunately, you can’t use the integrated P11 Calculator on HM Revenue & Customs’ (HMRC’s) Employer CD-ROM to work out and record free of tax payments. You’ll need to do it manually, unless you use commercial payroll software with the necessary functionality. All of an employee’s earnings…

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Making payments under an income drawdown arrangement

Making payments under an income drawdown arrangement

Income drawdown is a facility that allows individuals to defer purchase of an annuity from their pension provider, and to receive an income from their pension fund instead. If you make payments to an individual under an income drawdown arrangement, HM Revenue & Customs (HMRC) will treat them in the same way as standard pension payments. So, when you make the first drawdown payment: complete and file a form P46 (Pen) to HMRC – send…

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National Insurance contributions – employers responsibilities

National Insurance contributions – employers responsibilities

Broadly speaking, National Insurance contributions (NICs) are payable on employee earnings, including non work related expenses and provided benefits. There are different classes of NICs that apply in different circumstances. Some are paid by both employers and employees, some by employers only and others by the self-employed. As an employer your main responsibilities are: to deduct and pay the employer and employee Class 1 NICs due on your employees’ earnings through your payroll to pay…

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National Insurance contributions: no change

New employee: dealing with form P45

New employee: dealing with form P45

If your employee doesn’t have a form P45, please read the section on completing form P46. When someone changes jobs, their old employer should give them a form P45. This shows the leaver’s: National Insurance number tax code total pay and tax to the date they left (unless the employee was on a week 1/month 1 tax code in which case this box will be left blank) The form has four parts – your new…

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New pension to employee who has just retired

New pension to employee who has just retired

If you start paying a new pension to an employee who has just retired from work with you, then you must send HM Revenue & Customs (HMRC) the following information within 14 days of the employee’s retirement: the employee’s name, address and National Insurance number, if known their retirement date their total pay from you in the current tax year up to their retirement date the tax you’ve deducted from their pay for the tax…

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New pension to employee who still works for you

New pension to employee who still works for you

If your new pension payment is to an individual who is continuing in employment with you, then: complete and submit form P46 (Pen) to HM Revenue & Customs (HMRC) – remember you must file online if you have 50 or more employees do not merge your pension and employment payments to the individual until you hear otherwise from HMRC, continue using the same tax code as before for the individual’s employment income until you hear…

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New pension to former employee – no form P45

New pension to former employee – no form P45

If your new pension payment is to a former employee, but they don’t have a form P45 from their most recent employer, you must: complete the “Pension recipient” and “About the pension/income drawdown/income withdrawal” sections of form P46 (Pen) and submit to HM Revenue & Customs (HMRC) – you must not give the form to the pension recipient to complete until you hear otherwise from HMRC, use the emergency tax code on a week 1/month…

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New pension to former employee – with form P45

New pension to former employee – with form P45

If your new pension payment is to a former employee who has a P45 from their most recent employer, you must: complete and submit a form P46 (Pen) to HM Revenue & Customs (HMRC) – you can also use form P45 Part 3 for this purpose, but using P46 (Pen) is preferable until you hear otherwise from HMRC, use the tax code on the pension recipient’s form P45 on a week 1/month 1 basis when…

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Next steps when you know a workers employment status

Next steps when you know a workers employment status

You should keep a record of any information you used to make your decision about their employment status. If the worker is employed by you If the worker is your employee, then you must use the PAYE system to deduct and pay HM Revenue & Customs (HMRC) any tax and National Insurance contributions (NICs) due on their earnings. If the worker is your first ever employee then you’ll also have to register as an employer…

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NICs on holiday pay that you pay in advance

NICs on holiday pay that you pay in advance

There are special National Insurance contributions (NICs) procedures to follow if your employee receives their holiday pay in advance. You can calculate the NICs due on the holiday pay using either of the following two methods. Method A – split the payment Split the payment across the weeks that it covers and calculate the NICs due in each week. For example, if you pay an employee two weeks’ pay before they go on holiday for…

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Nominating charities

Nominating charities

It’s up to your participating employees to choose which registered charities they want to support. When you sign up to an approved Payroll Giving Agency, they’ll give you charity nomination forms. Your employees can fill these in and return them directly to the Payroll Giving Agency. This means that their choice of charity is confidential. There’s no need for you to know and they may prefer to keep this information to themselves. If they want…

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Non-standard pay days or pay intervals and non-cash pay

Non-standard pay days or pay intervals and non-cash pay

You may need to follow slightly different procedures when you work out the tax due if: you don’t use a standard pay interval the pay day is on a non-banking day like a Sunday you move a pay day There are also special procedures for dealing with special types of pay like non-cash alternatives. Find out how to deal with non-standard or moving pay days on the HM Revenue & Customs (HMRC) website – Opens…

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Notifying HMRC if you have no Employer Annual Return to make

Notifying HMRC if you have no Employer Annual Return to make

If you haven’t had to maintain any form P11s during the tax year you don’t need to complete an Employer Annual Return – but you do need to tell HM Revenue & Customs (HMRC) that you won’t be completing one. If you don’t, they may send you unnecessary reminders or penalty notices. How to notify HMRC You can let HMRC know either: online using the links below (recommended) or by writing to or telephoning your…

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Online filing methods you can choose from

Online filing methods you can choose from

There’s a range of online filing methods you can use to send your Employer Annual Return (P35 and P14s) to HM Revenue & Customs (HMRC). Please note that you’re not restricted to using just one of these options. For example, you could have an agent file your P14s but then file your form P35 yourself using HMRC’s free service. Commercial payroll software If you use a software package for your day-to-day payroll during the year…

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Operating in-house payroll manually

Operating in-house payroll manually

Whereas payroll software automatically works out payments and deductions and then updates your payroll records for you, with the manual method you use either calculators or tables to work out the figures and update your records yourself. This is a more time-consuming way of managing your payroll than using software. It also creates additional work for you at the end of the tax year now that online filing of the Employer Annual Return is a…

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Operating in-house payroll using commercial software

Operating in-house payroll using commercial software

A computerised payroll will almost certainly be more convenient and less time consuming to operate than carrying out manual calculations, particularly if you’re going to employ a number of people. What will commercial payroll software do? You’ll have to record the employee’s details initially, using information from the form P45 or form P46. However, once you have done this, the software will: calculate Income Tax, National Insurance contributions (NICs) and student loan deductions every payday…

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Operating in-house payroll using free HMRC software

Operating in-house payroll using free HMRC software

As an alternative to commercial software you can manage your payroll using HM Revenue & Customs’ (HMRC’s) free P11 Calculator on the Employer CD-ROM. This doesn’t offer a complete payroll system but it will work out your employees’ deductions for you. The P11 Calculator also provides many employers with a simple way of meeting the requirement to file their Employer Annual Return online. If you have nine or fewer employees on the last day of…

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Other pay and deductions

Other pay and deductions

Follow the links below to read about the other payments or deductions you may need to make including: holiday pay guarantee pay deductions from earnings orders (DEOs) – to collect child maintenance payments from a non-resident parent Holiday pay and PAYE Pay – an overview of obligations Read about DEOs on the Child Support Agency (CSA) website – Opens in a new window.

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Other staff records you need to keep

Other staff records you need to keep

It’s not only records relating to PAYE (Pay As You Earn) and statutory payments that you must keep by law. You should, for example, also keep records of: hours worked pay rates holidays accidents, injuries and dangerous occurrences accounting data crime prevention information pensions data mortgage or insurance administration For details on setting up and keeping staff records, including Data Protection requirements, read our related guide below. Keep the right staff records

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Outsourcing payroll – options and considerations

Outsourcing payroll – options and considerations

There are many providers that can offer you an outsourced payroll service. Most accountants offer a payroll service. Some may even run a specific department that deals just with this. It might make business sense to ask your accountant if they can provide you with payroll services. They’ll already be familiar with your business and might offer you a competitive rate as part of a package of services. Alternatively, you could outsource your payroll to…

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Overview of the funding process

Overview of the funding process

If you’re entitled to recover payments of Statutory Sick Pay, Statutory Maternity Pay, Statutory Adoption Pay or Statutory Paternity Pay that you have made to an employee, then the usual way to do so is by reducing your monthly or quarterly payments to HM Revenue & Customs (HMRC) by the relevant amount. The payments you can reduce for this purpose are: PAYE tax National Insurance contributions Student Loan deductions Construction Industry Scheme deductions If you…

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Paper P11 option 1 – using the PAYE tax calculator

Paper P11 option 1 – using the PAYE tax calculator

You can use HM Revenue & Customs’ (HMRC’s) free PAYE tax calculator to work out the tax you need to deduct from each employee’s pay. The calculator will also work out the figures you need to put into Columns 3 to 8 of the employee’s P11. You can use the calculator on the HMRC website or on the Employer CD-ROM. The calculator works in the same way as the tables. You can use it for…

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Pay and deductions during the year

Pay and deductions during the year

If your employee’s taxable pay is at least equal to the lower earnings limit, you’ll need to complete form P12 each time you pay them. HM Revenue & Customs (HMRC) recommends doing this electronically, but you can also use paper versions of form P12. The benefits of operating simplified PAYE electronically Using electronic rather than paper-based methods to operate the Simplified PAYE Scheme saves you time and reduces errors. You can either use commercial payroll…

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Pay any Class 1A NICs due on expenses and benefits

Pay any Class 1A NICs due on expenses and benefits

What to do You must send HM Revenue & Customs (HMRC) any Class 1A National Insurance contributions (NICs) that are due on the taxable expenses and benefits you have paid or provided. When to do it If you’re sending payment by post, it must reach your HMRC Accounts Office by . If you’re sending payment by an approved electronic method, your payment must be cleared in HMRC’s bank account by . Interest will be charged…

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PAYE and Class 1 NIC: no payslip

PAYE and Class 1 NIC: no payslip

If you pay your PAYE (Pay As You Earn) and Class 1 National Insurance contributions (NICs) electronically you will not need a payslip. HM Revenue & Customs (HMRC) recommends that you make your PAYE and Class 1 NICs payments electronically using one of the methods described elsewhere in this guide. Electronic payments are generally more efficient and secure, provided you give HMRC an accurate reference number. However, if you are paying by post and you…

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PAYE and Class 1 NICs payment deadlines

PAYE and Class 1 NICs payment deadlines

(Direct Debit, BACS Direct Credit, internet or telephone banking, debit or credit card over the internet using BillPay, CHAPS, GBS Transfer (formerly known as Paymaster), Bank Giro, Post Office) 22nd of each month cleared payment must reach HM Revenue & Customs’ (HMRC) bank account no later than the last bank working day before the 22nd 19th of each month cheque must reach the HMRC Accounts Office no later than the last bank working day before…

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PAYE deadlines – interactive tool

PAYE forms and deadlines at a glance

PAYE forms and deadlines at a glance

When you operate PAYE (Pay As You Earn) you’ll use certain key forms and procedures to keep a record of all the payments you make to your employees. Some forms give you the information you’ll need to operate PAYE correctly and you’ll use others to tell HM Revenue & Customs (HMRC) about your employees and their pay details. Employee forms . New employees who have had a previous job, or have had a period on…

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PAYE forms you must send to HMRC online

PAYE forms you must send to HMRC online

For almost all employers it’s a requirement to file some PAYE forms online. The Employer Annual Return (P35 and P14s) Almost all employers are now required to file their Employer Annual Return (P35 and P14s) online. For more information, including details of the very few exceptions to this requirement, see our guide below. File your Employer Annual Return online: P35 and P14s  In-year forms including P45 and P46 It’s becoming compulsory for employers to file…

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PAYE if theres a change from employment to self-employment

PAYE if theres a change from employment to self-employment

If the status of someone who works for you changes from employed to self-employed then you will no longer have to operate PAYE for them. Instead, you will pay them gross for any work they complete for you, and it will be their responsibility to ensure that the necessary tax and National Insurance contributions are paid to HM Revenue & Customs (HMRC). You will have to complete and file a form P45 for the worker…

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PAYE online filing requirements

PAYE online filing requirements

You can submit many PAYE (Pay As You Earn) forms over the Internet once you have registered with (HM Revenue & Customs) HMRC’s ‘PAYE Online for employers’ service. Sending information online is quick and easy and it’s more reliable and efficient than using paper forms. Online filing is also becoming a requirement for an increasing number of key PAYE forms: Nearly all employers must now file their Employer Annual Return (P35 and P14s) online. Employers…

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PAYE Online registration and login

PAYE Online registration and login

Allow time to activate PAYE Online In order to file online, you must be registered with the HM Revenue & Customs (HMRC) ‘Online for employers’ service. The registration process only takes minutes, but you won’t be able file online until you have ‘activated’ the service using an Activation PIN that HMRC sends you by post. This can take up to a week to arrive – so don’t leave registration and activation until the last minute….

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PAYE Settlement Agreement payment deadlines

PAYE Settlement Agreement payment deadlines

PAYE Settlement Agreement (PSA) electronic payment deadline Your cleared payment must reach HM Revenue & Customs’ (HMRC’s) bank account no later than 22 October. Where 22 October falls on a weekend or bank holiday, you must ensure that your payment arrives no later than the last bank working day before 22 October. Bank working days are Monday to Friday, excluding bank holidays. PSA postal payment deadlines Your cheque payment must reach HMRC no later than…

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PAYE tax and NICs on payments to an employee whos leaving

PAYE tax and NICs on payments to an employee whos leaving

Payments to an employee who is leaving or retiring are treated differently depending on whether they count as standard payments (such as salary, wages, holiday pay and bonuses) or one-off payments (including redundancy payments and retirement lump-sums). PAYE tax on standard payments In most cases you must work out, record and deduct PAYE tax as usual on any standard payments that you make to your employees when, or after, they leave your business. However, if…

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Paying and recovering SAP

Paying and recovering SAP

If you use commercial payroll software, it will help you decide if Statutory Adoption Pay (SAP) is due and do most of the calculations for you. Or you can use HM Revenue & Customs’ (HMRC’s) free SAP calculator on their website or your Employer CD-ROM. This will: tell you if your employee’s entitled to be paid SAP work out how much SAP is due work out how much SAP you can recover – including compensation,…

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Paying and recovering SMP

Paying and recovering SMP

If you use payroll software, it will help you decide if Statutory Maternity Pay (SMP) is due and do most of the calculations to work out how much you must pay. You can also use HM Revenue & Customs (HMRC) free SMP calculator on the HMRC website or your Employer CD-ROM. This will: tell you if your employee is entitled to be paid SMP work out how much SMP is due work out how much…

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Paying Class 1A NIC without a payslip

Paying Class 1A NIC without a payslip

If you pay your Class 1A National Insurance contributions (NICs) electronically you will not need a payslip. HM Revenue & Customs (HMRC) recommends that you make your Class 1A NICs payments electronically using one of the methods described elsewhere in this guide. Electronic payments are generally more efficient and secure, provided you give HMRC an accurate reference number. However, if you are paying by post and you don’t have a payslip, these details should accompany…

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Paying pension arrears in a lump sum

Paying pension arrears in a lump sum

You must deduct PAYE tax through your payroll from any lump-sum payments of pension arrears that you make. Do this in the same way as for normal pension payments – for more information follow the link at the end of this page. However, tax is actually due on the amount of pension that recipients are entitled to receive each tax year, not the amount they receive. This can cause complications if you have to make…

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Paying tax and National Insurance contributions under a PAYE Settlement Agreement

Paying tax and National Insurance contributions under a PAYE Settlement Agreement

The tax and Class 1B National Insurance contributions (NICs) owed under a PAYE Settlement Agreement (PSA) can be paid to HM Revenue & Customs (HMRC) no later than 19 October following the tax year to which the PSA relates (22 October if you pay by electronic means). Find out about paying tax and Class 1B NICs on your PSA on the HMRC website – Opens in a new window.

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Payments at the Post Office

Payments at the Post Office

You can make a PAYE Settlement Agreement (PSA) payment at the Post Office by cheque, cash or debit card without charge. HM Revenue & Customs (HMRC) treats any payment made at the Post Office as electronic. If paying this way please: take your PSA payslip with you – otherwise you’ll be charged for using this service make cheques payable to ‘Post Office Ltd’ To allow for possible delays in bank processing, for which HMRC is…

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Payments by Bank Giro

Payments by Bank Giro

If your bank or building society offers the Bank Giro service you can make a PAYE Settlement Agreement (PSA) payment at your own bank branch by cheque or cash. HM Revenue & Customs (HMRC) treats any payment made by Bank Giro as electronic. If paying this way please: take your PSA payslip to your own bank branch – other banks may refuse to accept it or may charge you for this service make cheques payable…

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Payments using GBS Transfer (formerly known as Paymaster)

Payments using GBS Transfer (formerly known as Paymaster)

Employers such as government departments and health authorities who have an account with the Office of the Paymaster General can make PAYE Settlement Agreement (PSA) payments using GBS Transfer (formerly known as Paymaster). The Office of the Paymaster General transfers the payments direct to HM Revenue & Customs’ (HMRC’s) bank account. Provided you initiate payment within the time specified by the Office of the Paymaster General – usually between 09.00 and 15.00 – they will…

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Penalties for using the wrong filing method

Pension and annuity payments: special situations

Pension and annuity payments: special situations

Our related guide ‘Pension and annuity payments: special situations’ sets out the steps you need to take in less common situations – such as paying more than one pension to an individual, making a ‘trivial commutation’ payment, or suspending pension payments if you’re unable to track down its recipient. Pension or annuity payments – special situations

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Receiving new year tax codes from HMRC

Receiving new year tax codes from HMRC

Increasingly, HM Revenue & Customs (HMRC) sends tax code notices online to employers. It will start sending them online as soon as you register for its ‘PAYE Online for employers’ service – which most employers must now do in order to meet the requirement to file their Employer Annual Return online. There are two ways of accessing the tax codes that HMRC sends online. You can: Log on to the ‘PAYE Online for employers’ service…

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Receiving tax codes from HMRC

Receiving tax codes from HMRC

HM Revenue & Customs (HMRC) will start sending new tax codes to you online rather than by post as soon as you register for the ‘PAYE Online for employers’ service. If this applies to you it’s important to check regularly to see whether any tax code notices have been sent to you online. There are two ways of accessing tax codes that HMRC has sent to you online. You can: Log on to the ‘PAYE…

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Receiving tax codes from HMRC >> Understanding Employee Tax Codes

Receiving tax codes from HMRC >> Understanding Employee Tax Codes

Increasingly, HM Revenue & Customs (HMRC) is sending tax code notices to employers online. You will start receiving your tax codes online as soon as you register for the HMRC ‘PAYE Online for employers’ service. (Nearly all employers must now register for PAYE Online in order to meet the requirement to file their Employer Annual Return online.) There are two ways of accessing the tax codes that HMRC sends online to you. You can: Log…

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Record keeping >> The National Minimum Wage

Record keeping >> The National Minimum Wage

You must keep records that show you pay at least the national minimum wage (NMW) to anyone who works for you and is entitled to it. If you pay your workers well above the minimum requirement, then it’s likely that your standard payroll and other business records will be sufficient for this purpose. HM Revenue & Customs compliance officers are entitled to ask you to produce your records for inspection. In certain circumstances, you must…

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Record keeping if you are not required to complete a form P11

Record keeping if you are not required to complete a form P11

If you’re not required to complete a form P11 (see the earlier guidance for when this applies) bear in mind that you still need to keep a record of your employee’s name and address and the amount of wages paid in each pay period. What about taxable expenses and benefits? If you provide your employees with taxable benefits and expenses you’ll need to complete separate forms and keep separate records of these – most of…

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Record the taxable benefits and pay Class 1A NICs on them

Record the taxable benefits and pay Class 1A NICs on them

If you provide a taxable benefit to an employee you must take the following actions: calculate the cash equivalent value of the benefit record the value of the benefit on a form P11D Expenses and Benefits if it is provided to a company director or to an employee earning £8,500 or more submit a form P9D if you provide a benefit to an employee whose earnings are less than £8,500 (including the value of any…

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Recording and accounting for your tax-free payment

Recording and accounting for your tax-free payment

You must record details of your tax-free payment on form P35 when filing your Employer Annual Return: Enter any amount self-served in box 26 ‘Tax-free incentive payment received during the year’. You don’t need to record amounts received by cheque in this P35 box 26. So if you receive a cheque for the full £75, enter ‘0’. You don’t have to pay VAT on the tax-free payment or show it on your VAT return. In…

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Records relating to sickness and sick pay

Records relating to sickness and sick pay

You’ll need to record: how long your employee is off sick – known as period of incapacity for work (PIW) how much Statutory Sick Pay (SSP) you paid the dates when you didn’t pay SSP and why You should also keep records of supporting medical evidence, which is usually a note from your employee’s doctor or hospital. Calculating and recovering Statutory Sick Pay

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Records relating to statutory maternity, paternity or adoption pay

Records you need to keep

Records you need to keep

You’ll need to keep certain records if you run a Payroll Giving Scheme. These are: a copy of your contract with the Payroll Giving Agency the forms that your participating employees fill in authorising you to make the deductions from their pay a record of the deductions that you make from each employee’s pay a record of all the money you pass on to the Payroll Giving Agency

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Register for PAYE Online – if you have not yet done so

Register for PAYE Online – if you have not yet done so

If you are required to maintain a P11 Deductions Working Sheet or equivalent record for at least one of your employees, you’ll need to file an Employer Annual Return each year. See the section in this guide on this for the detail. However bear in mind that almost all employers must file their return online – and in order to do so you must first register as a user of the PAYE (Pay As You…

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Registering for PAYE Online

Registering for PAYE Online

In order to file your Employer Annual Return online you must first register as a user of the ‘PAYE Online for employers’ service (or ‘enrol’ if you’re already using another online service). Registering or enrolling for PAYE Online only takes a matter of minutes, but you’ll need to wait to receive an Activation PIN in the post before you can start to file online. This will take up to a week to arrive. The deadline…

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SAP – an overview

SAP – an overview

Statutory Adoption Pay (SAP) is paid for 39 weeks and usually covers the first 39 weeks of an employee’s adoption leave. The amount you must pay to eligible employees is the of: the standard weekly rate – 136.78 in 2013-14 90 per cent of their average weekly earnings Joint and individual adoptions If an employee is adopting on an individual basis, they’ll be eligible for SAP if they meet the relevant criteria outlined in the…

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SAP and salary sacrifice schemes

SAP and salary sacrifice schemes

If you provide benefits to your employees under a salary sacrifice scheme, this can have an impact on Statutory Adotion Pay (SAP). Follow the link below for guidance on this issue. Download information about the impact of salary sacrifice arrangements on SAP from the HM Revenue & Customs (HMRC) website (PDF, 133K) – Opens in a new window.

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SAP eligibility – UK adoptions

SAP eligibility – UK adoptions

A person qualifies for Statutory Adoption Pay (SAP) when adopting a child from within the UK provided they have: at least 26 weeks’ continuous employment with you extending into the ‘matching week’ – this is the week (beginning on Sunday and ending on Saturday) in which they are notified of having been matched with the child given you at least 28 days’ notice (or as much as is reasonably practical) of the date from which…

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Sending your P14s and P35 separately

Sending your P14s and P35 separately

You can file your forms P14 and your form P35 separately to HM Revenue & Customs (HMRC). This might be useful if your payroll arrangements make it impractical to send the entire return at the same time – for example, if a payroll agent files your P14s for you but you file your P35 yourself. Follow the link at the end of this section for more detailed information, but bear the following points in mind…

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Setting up new payroll records at the start of the tax year

Setting up new payroll records at the start of the tax year

At the start of the tax year you’ll need to set up a new form P11 or equivalent record (either electronic or paper) for every employee who’ll be working for you in the coming tax year and for whom any of the following applies: their pay is at or above the National Insurance contributions (NICs) Lower Earnings Limit (£95 a week, £412 a month or £4,940 a year for 2009-10) HM Revenue & Customs (HMRC)…

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Shortening the interval between paydays

Shortening the interval between paydays

NICs changes The implications for National Insurance contributions (NICs) of shortening your payment interval – from monthly to weekly, for example – are straightforward. From the first payday after the change of interval, calculate NICs using the appropriate tables for the new earnings period. PAYE changes Calculating your PAYE tax deductions is slightly more complicated. Once again, you need to switch to using the appropriate tables for your new shorter earnings period. But the timing…

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Simplified PAYE for domestic employees

Simplified PAYE for domestic employees

Here are some links to help notes to help you with simplified PAYE for domestic employees Publication name and reference When to use P25: Simplified PAYE deduction scheme notes (PDF 343K) Applies to 2012-13 tax year P16: Help with filling in form P12 (PDF 420K) 6 April 2012 to 5 April 2013 CA37: National Insurance Contributions (NICs) tables (PDF 637K) 6 April 2012 to 5 April 2013

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Simplified PAYE forms at a glance

Simplified PAYE forms at a glance

The key forms for the Simplified PAYE (Pay As You Earn) Deduction Scheme are: P16A Employer’s report when taking on a new employee P12 Simplified Deduction Card – one for each employee – filled in each time you pay them – instructions in help leaflet P16 P16 Simplified PAYE Deduction Scheme – leaflet explaining how to fill in a form P12 and use tax tables P37 Employer Annual Return – summarises the information in your…

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SMP and salary sacrifice schemes

SMP and salary sacrifice schemes

If you provide benefits to your employees under a salary sacrifice scheme, this can have an impact on Statutory Maternity Pay (SMP). Follow the link below for guidance on this issue. The guidance also provides details of the non-cash benefits employers are required to provide to employees on statutory maternity leave. Download advice about the impact of salary sacrifice arrangements on SMP from the HM Revenue & Customs website (PDF, 133K) – Opens in a…

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SMP eligibility and rates – overview

SMP eligibility and rates – overview

You must pay Statutory Maternity Pay (SMP) to your employee if they meet certain conditions. They must have: worked for you continuously – full or part-time – for at least 26 weeks up to and into the 15th week before the week the baby’s due average weekly earnings at least equal to the lower earnings limit (LEL) for National Insurance Contributions (NICs) that applies in the 15th week before the expected due date – in…

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Special holiday pay schemes – what to include in gross pay

Special holiday pay schemes – what to include in gross pay

If you operate any of the following holiday pay schemes, make sure you include the correct amounts in your employees’ gross pay when calculating PAYE tax and National Insurance contributions (NICs). Holiday pay set aside during the year If an employee voluntarily sets aside some of their pay during the year and you return it to them later as holiday pay – for example, at Christmas or their annual leave – you should include the…

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Special rules for employees over State Pension age

Special rules for employees over State Pension age

When an employee reaches the State Pension age they no longer have to pay employee’s National Insurance contributions (NICs), but you must pay employer’s NICs using NICs category letter C at the not-contracted out rate. This applies even if the employee was contracted out before reaching State Pension age. Note that reaching the State Pension age only affects NICs – there’s no change to PAYE tax deductions. Download publication CA41 containing NICs tables for category…

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SSP – employer obligations

SSP – employer obligations

As an employer you’re responsible for operating the Statutory Sick Pay (SSP) scheme. You’ll need to: work out whether an employee meets the qualifying conditions calculate how much SSP they’re due pay the SSP to them keep a record of the SSP you pay If you keep paying your employees their normal wage when they’re sick – and you pay them at least as much as the SSP they’d get – you don’t have to…

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SSP and salary sacrifice schemes

SSP and salary sacrifice schemes

If you provide benefits to your employees under a salary sacrifice scheme, this can have an impact on Statutory Sick Pay (SSP). Follow the link below for guidance on this issue. Downland guidance on the impact of salary sacrifice arrangements on SSP from the HM Revenue & Customs (HMRC) website (PDF, 133K) – Opens in a new window.

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SSP rates

SSP rates

The weekly rate of Statutory Sick Pay (SSP) for days of sickness from April 2013 is 86.70, our related guide ‘Calculating and recovering Statutory Sick Pay’ below explains how to work out the daily rates. They are also shown on the Statutory Sick Pay daily rates table in the E14, Employer Helpbook for Statutory Sick Pay. Calculating and recovering Statutory Sick Pay Check SSP daily rates in Employer Helpbook E14 on the HM Revenue &…

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Statutory maternity, paternity and adoption pay

Statutory maternity, paternity and adoption pay

As an employer, for the first 6 weeks of maternity leave you will have to pay 90% of the employee’s average weekly earnings. For the next 33 weeks you’ll pay: Statutory Maternity Pay: 136.78 or 90% of the employee’s average weekly earnings, whichever is lower Statutory Paternity Pay: 136.78or 90% of the employee’s average weekly earnings, whichever is lower Statutory Adoption Pay: 136.78or 90% of the employee’s average weekly earnings, whichever is lower You will…

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Statutory payments and student loan deductions

Statutory payments and student loan deductions

Statutory Sick Pay (SSP) As an employer you’re liable to pay SSP to employees who are off work sick and who meet certain qualifying conditions. SSP provides a minimum level of pay to employees who are absent from work due to sickness. You should pay any SSP due at the same time and in the same way as normal payments of wages or salary that you make to the employee. SSP is treated like the…

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Statutory payments or student loan deductions

Statutory payments or student loan deductions

As an employer you may have to deal with some payments and deductions other than tax and National Insurance contributions (NICs). Statutory payments If your employee is off work because they’re sick you may need to pay them Statutory Sick Pay. If your employee becomes a parent you may need to pay Statutory Maternity Pay, Statutory Paternity Pay or Statutory Adoption Pay. Find guidance on statutory pay on the HM Revenue & Customs (HMRC) website…

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Student loan deductions

Student loan deductions – make it easy

Student loan deductions – make it easy

You’ll find that using approved commercial payroll software or HM Revenue & Customs’ P11 Calculator on the Employer CD-ROM will save you time and always give more accurate results than using paper methods. Using software also simplifies the process of filing your Employer Annual Return (P35 and P14s) online. This is a significant advantage now that almost all employers are required to file their annual return online. File your Employer Annual Return online: P35 and…

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Student loan recovery

Tables for calculating PAYE tax and NICs

Tables for calculating PAYE tax and NICs

Here are some links to guides to manually calculating PAYE tax and National Insurance contributions (NICs) Publication name and reference When to use Taxable pay tables: calculator method (PDF 73K) 6 April 2012 to 5 April 2013 Taxable pay tables: manual method (PDF 95K) 6 April 2012 to 5 April 2013 Tables A: pay adjustment tables (PDF 704K) Until further notice CA38: NICs tables A and J (PDF 864K) 6 April 2012 to 5 April…

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Taking on a new domestic employee

Taking on a new domestic employee

Each time you take on a new domestic employee you’ll have to: complete and send form P16A to HM Revenue & Customs (HMRC) if the employee earns more than the lower earnings limit send HMRC parts two and three of your employee’s P45 (if they give you one) with form P16A ask your employee to apply for a National Insurance number if they’ve never had one – they can apply by calling the DWP National…

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Taking on a new employee – further information

Taking on a new employee – further information

For more information about dealing with forms P45 and P46 when taking on a new employee, follow the links below for answers to common questions. Read HM Revenue & Customs (HMRC) guidance and advice on completing form P45 for your new employee – Opens in a new window. Read HMRC guidance and advice on completing form P46 for your new employee – Opens in a new window. If you still can’t find the information you’re…

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Tax and NICs on pension payments: an overview

Tax and NICs on pension payments: an overview

When you make a pension payment you must put it through your payroll, but not in quite the same way as you do with standard wage or salary payments to your employees. Provided your pension scheme has been registered with HM Revenue & Customs (HMRC) – this allows the scheme to benefit from certain tax reliefs and exemptions – then: you must deduct PAYE tax from any payments you make from the scheme you don’t…

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Tax and NICs on salary sacrifice arrangements

Tax and NICs on salary sacrifice arrangements

Salary sacrifice doesn’t have a set effect on the tax and National Insurance contributions (NICs) that are payable on an employee’s remuneration. The impact will differ in each case depending on the specific package of pay and non-cash benefits that make up the salary sacrifice arrangement. Your key obligation is to make sure that you pay and deduct the right amount of tax and NICs for the mix of cash and benefits that you provide…

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Tax code when no P45 – form P46 completed

Tax code when no P45 – form P46 completed

If your employee doesn’t have a P45 they’ll need to complete form P46. Read our guide below for more on this. Taking on a new employee In the “Tax code used” part of section two on the P46: tick box A, B or C in line with the box ticked in section one enter the tax code indicated in the table below enter this in the “Tax code used” field of your software or Box…

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