PAYE for employers
As an employer, it is your responsibility to correctly determine the employment status of your workers – that is, whether they’re employed by you or self-employed. This depends on the terms and conditions of your working relationship with each worker.
It’s important to ascertain the correct employment status because it affects the way tax and National Insurance Contributions (NICs) are calculated for each worker. It also determines whether or not you have to operate a PAYE scheme on their earnings. PAYE (Pay As You Earn) is tax that is deducted at source – that is, from payments made to employees. Amounts deducted are treated as advance payments of income tax due from the employee and are refundable when payments made on account exceed any tax due (as determined by self assessment).
PAYE is deducted from each employee’s pay by the employer and must be remitted promptly to HMRC, with annual employer returns due on 19th May each year. Strict penalties apply for non filing of your annual P35 return by the due dates.
If you need assistance with PAYE matters, or if you wish to outsource your payroll services to iC, then please contact us.
In April 2013 HM Revenue & Customs (HMRC) is introducing a new way of reporting PAYE – find out your obligations..