Module 6

Question 1

PAYE includes

Answer 1

Employment
Pensions
Social security

Question 2

PAYE code is

Answer 2

Alphanumeric code tells employer how much cash can earn tax free

2-4 digit followed by L

Question 3

Taxable or non cash benefit

Answer 3

PAYE code nets off e.g 2000 car code 105L

Question 4

Prefix K code means

Answer 4

Adjustments exceed allowances
Taxable pay

Limit of 50% of the amount of actual cash remuneration of each pay day that can be deducted

E.g PA 12500, benefit 13500 negative 1000, drop 0 to 100, -1 to K99

Question 5

K code derived by

Answer 5

Taking excess of benefits

dropping last digit and reducing by 1

Question 6

When an employer operates the code they

Answer 6

Drop the letter and add a 9
K99
Taxes 999 extra on earnings
508L becomes 5089

Allows for rounding in taxpayers favour

Question 7

Coding notice

Answer 7

P2 form

Question 8

Tax Bandings spread over

Answer 8

Whole year

Question 9

RTI

Answer 9

Real time information systems record pay, tax and NIC

Employer Obliged to pay within 17 days of end of each tax month me 14 days of cheque
Tax month 5th, due by 22nd

Question 10

PAYE forms

Answer 10

P60 summarises total pay and tax

P45 new employee to new employer provided by previous

Question 11

Apprenticeships level

Answer 11

Once bill of £3m reaches levy of 0.5% of annual pay bill paid to HMRC

Allowances of 15000 for hiring apprentices

Question 12

P60 given our date

Answer 12

Before 1 June following end of tax year

Question 13

Class 1 NIC

Answer 13

Employees pay a primary contribution on salary

Employer responsible for a secondary contribution

None for younger than 16 
No primary class 1 for pensiable age

Employers who have employees under 21 not liable to pay secondary on earnings paid up to 50000
Primary still due

Employers who have Apprentices under 25 not liable to pay seconds in earnings up to 50000
Primary still due

Question 14

Class 2 NIC contributions

Answer 14

Paid by the self employed and are flat rate

No liability until 16th birthday
None once pensionable age

Lump sum on 31 jan

Unless below small profits threshold of 6365

Question 15

Class 3 NIC contributions?

Answer 15

Voluntary nature
Paid by those who have insufficient contributions to qualify in full for earnings related state benefits

Not working or earning enough

Question 16

Class 4 NIC contributions

Answer 16

Profit related for self employed

Not under age 16
Not over pension age

Include class 4 in tax comp of self employed due 31 jan

Question 17

K code limit

Answer 17

50% of amount of actual cash remuneration

Question 18

L code entitled to receive?

Answer 18

Tax free pay through PAYE each year

Question 19

L code calculate?

Answer 19

Personal allowance

• taxable benefits
• unpaid income tax /20 x 100

Question 20

Employees under 21

Answer 20

Have to pay NIC Class 1 primary

But employers don’t have to pay secondary on their earnings up to secondary threshold of 50000