If your business has employees, you’re legally obliged to meet your payroll tax obligations. You’ll want to ensure that payroll is painless and that you take advantage of any opportunities to improve your tax-efficiency.

We’ve included useful tools and calculators, but most employers find it easiest to get professional payroll help. Accountancy Summit Ltd can advise you on what system would suit you best and the services on offer.

Payroll tax & PAYE

Payroll tax and PAYE

Payroll taxes are generally collected through the PAYE (Pay As You Earn) system operated by employers. If you have employees, you’ll almost certainly be required to operate PAYE unless all your employees have low earnings, aren’t given any additional benefits or don’t have income from another job or pension.

This applies even if you have set up a company with yourself as the only employee. You do not have to collect payroll taxes through PAYE if you are self-employed and have no employees.

Payroll taxes handled through PAYE include income tax and National Insurance contributionsdeducted from employees’ pay and the employers’ National Insurance paid by the business. The PAYE system involves calculating and paying any payroll taxes due to HM Revenue & Customs (HMRC), generally on a monthly basis.

The PAYE system is changing. By April 2014 all businesses will be required to report payroll information and send the tax and NI deducted electronically to HMRC every time an employee is paid - known as Real Time Information (RTI) - (instead of annually through form P46).

To do this you will either need to use RTI compatible software or outsource your payroll to a payroll bureau or Accountancy Summit Ltd. Alternatively, HMRC has produced basic PAYE tools and calculators which are suitable for small employers to use to fulfil their online filing requirements.

The new RTI PAYE system is linked to employees’ benefit payments – now known as Universal Credit payments - to improve the accuracy rate of tax payments and benefits.

You can find what you need to do to prepare for RTI PAYE reporting on the HMRC website.

Payroll tax & employment benefits

Payroll tax and employee benefits

The PAYE system also covers the payroll taxes due on most employee benefits, such as expenses, health insurance and company cars. The main exception is any pension contributions the business makes into an approved pension scheme. There are no tax or National Insurance payroll taxes on the value of this benefit.

In most cases, the payroll tax for benefits is assessed and collected annually. The employer must also provide details to employees, who may need to declare benefits (and income) in their own self-assessment tax returns.

Operating the PAYE payroll tax system

Operating the PAYE payroll tax system

Effective management of payroll taxes requires you to keep accurate records of employee details, pay and benefits. You need to calculate payroll tax deductions and make accurate, timely payments and provide payroll information to both employees and to HMRC. You also need to deal with complications such as statutory sick pay and student loan repayments.

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What our clients say

  • "Accountancy Summit have managed my accounts since I started business a few years ago. The accountancy side of the business was very daunting at first for me, but they have helped us with everything and helped with progressing & growing the business."

    Andy - Grappenhall, Warrington

  • "Accountancy Summit are great accountants and once you're with them you know you're in safe and reliable hands. The systems they use are simple but very effective.
    In addition, Mark is a thoroughly nice chap and very easy to get on with. I would therefore recommend him to anyone who wants to keep the financial aspects of their organisation under effective control"

    Jan - Manchester

  • "Mark always takes the time out to explain any 'technical' issues in layman's terms, reminds me when things are due, keeps everything up to date and provides regular feedback regarding his opinions on my company's financial status.
    This was invaluable when I started the company and he'll surely prove to be a critical asset as we grow and develop."

    Jan - Manchester

Get in touch

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Accountancy Summit
144 Knutsford Road
Grappenhall, Warrington
Cheshire WA4 2PW