PAYE & NIC

PAYE stands for – Pay As You Earn, and is the system that HM Revenue and Customs uses to collect income tax and national insurance contributions (NIC’s) from employees’ pay as they earn it.

Employer’s have a legal obligation to deduct tax and NIC’s from employees’ pay each and every time that they are paid above certain annually set thresholds. Tax and NIC’s deducted from employees’ pay should be paid across to HM Revenue and Customs monthly or quarterly, later payments or incorrect payments may attract interest charges.

When do I need to inform HM Revenue of Customs that I am paying employees?

Before you pay your employees for the first time you must check whether you are legally obliged to register to operate PAYE, contact us for further information. Once you have confirmed that your business has a legal obligation to register for PAYE you should complete an application to become an “employer” with HM Revenue and Customs, this is a simple process that can be completed online.

What payments should I apply PAYE to?

PAYE is also applicable on benefits in kind, such as company cars, private medical insurance and assets given to employee’s for their personal use. As an employer you will be liable to pay Class 1A NICs on most benefits in kind, however, these are paid separately from the PAYE system. Contact us for detailed guidance in this area.