PAYE is the HMRC system or software to collect Income Tax and National Insurance from the employment. It’s the responsibility of employer to maintain and operate PAYE as a part of your payroll.
When the employer pays their employees through payroll they also need to deduct for PAYE.
Payments to the employees include salary or wages, also the benefits employees can get from their employers such as tips, bonuses, maternity pay etc.
Reporting to HMRC:
If you run payroll, then you need to inform or report HMRC about the employee’s payments and deductions on or each day when you pay to your employees.
Your Payroll software will workout how much tax and national insurance you owe, including an employer’s contributions on each employee earning above 166 per week.
Usually every month through your reports you’ll be able to view what you owe HMRC, then you have to pay them.
When a new employee joins or if an employee’s circumstances change, you have to tell HMRC like an employee becomes a director or reach state pension age.
You have to maintain annual reports and reports HMRC at the end of every tax year, including telling HMRC about the benefits and expenses.
How to Run Payroll:
You can run payroll in the following ways;
- You can run by yourself
- Paying a payroll provider or hire a payroll agent to do it for you
Run Payroll by Yourself:
If you run Payroll by yourself then you have to registering yourself as an employer with HMRC and telling them about your employees.
Paying a Payroll Provider:
If you pay a payroll provider to run payroll on your behalf (for example a bureau or accountant), you’ll need to be considered how much support you’ll need.
Youre responsible for collecting and keeping data of employees because payroll provider needs data or record to run payroll for you.
Exemptions to Online Reporting:
There is some reason on which you’ll be exempt to Online Reporting;
- Prevent to use computer system on the religious ground
- Youre unable to send report electronically due to unavailability of internet, disabled or elderly.
- Youre getting care or support services for yourself or your family members
You must Collect and Keeping records of;
- Payments you pay to your employees and deductions
- Reports and payments, you make to HMRC
- Employees leaves and absences
- Taxable benefits and expenses
- Tax code notices
Your records show you’ve report accurately, and you need to keep the records for 3 tax periods from the end of the relevant tax period.
If Records are Stolen, destroyed or lost:
If you don’t have the records or destroyed, as soon as possible inform HMRC or do your best to recreate the records. HMRC also helps you to calculate how much tax you paid to your employees.