Employers are required by law to operate the PAYE tax and National Insurance rules to any payments to employee such as salaries, expenses and benefits. This includes, for example:

• All wages
• Salaries
• Company cars
• Mileage allowances
• Private health insurance

It is essential that employers keep up-to-date with the latest rules to ensure tax compliance.

The amounts collected by the employer are paid to HM Revenue & Customs in either monthly or quarterly instalments and are subject to the completion of an annual return (P35) at the end of each tax year (5th April). These returns must be submitted to HMRC by 19th May or penalties will be payable.

Employees are provided with a form P45 by their employer following the cessation of each employment, and a year-end certificate on form P60, showing the total tax and class 1 national insurance deducted from pay throughout the tax year.

Employers are also required to report 'Benefits and Expenses' (e.g. cars/ fuel/ medical costs/professional subscriptions etc) paid to or on behalf of particular employees. These payments are reported on a form P11D at the tax-year end (5th April) by June of each year. Penalties are charged for late delivery of these forms.

It is possible to arrange a 'dispensation' with HM Revenue & Customs in order to save on administration in regard to the expenses payments to be included in the report forms.

Where the employer has failed to comply, or has incorrectly applied the rules, HM Revenue and Customs can apply an interest charge and, potentially, penalties of up to 100% of the additional tax and national insurance payable.

Get the help you need with Pilbro

Don't let PAYE put you off taking on new employees and growing your business.

Pilbro can help with:

• Guidance on the latest rules and regulations
• Assistance at the end of the tax year with computations and returns
• Dealing with Revenue investigations and audits
• Advising on the tax position regarding payments, benefits and expenses

We can also provide a full payroll service should you require.

Please call Pilbro on 01280 820 654 to speak to us about your PAYE requirements.