PAYE (4) Flashcards
What is PAYE?
A system of deducting income tax and national insurance from salary before salary received
Objective of PAYE?
To deduct the correct amount of income tax and NI from employees over the year
What does PAYE also apply to in addition of wages and salaries?
ROund sum expense allowance and payments instead of benefits. Also readily covnertible asset
What is a readily convertible asset
Any asset which can effectively be exchanged for cash
What counts as pay for PAYE
Salaries, wages
Pensions
Commissions
Benefits
Statutory sick pay/maternity
TOps
How are benefits treated?
May be included within the payroll if employer chooses to do so
Otherwise they are reported on Form P11D
What employers do for PAYE?
Report their PAYE info real time. Every time an employee is paid, employer electronically sends a FPS on or before the day the employee is paid
What does an FPS include
Amount paid to each employee
Deductions of income tax and NIC
Starter and leaver information
Software used to submit RTI or HMRC?
Calculates the amount of deductions that must be made from the payment
What happens under RTI
An employer is required to submit information to HMRC electronically
Submitting to HMRC electronically methods?
Commercial payroll software
HMRC basic PAYE tax tooo
Using a payroll provider
What does an employer have a duty to in submitting info to HMRC
Deduct correct income tax and NIC
Keep record of pay and deductions
Pay tax/NIC over on due date
Send relevant income tax and NIC info electronically every time employee is paid
What must employee do when they elave employment?
Fill in relevant parts of deductions working sheet
Complete P45
When an employee joins and has a P45
Employer fills in part 3 and sends to HMRC
How is income tax treated under PAYE?
Income tax and national insurance are normally paid over to HMRC monthly
