Companies with employees will operate a payroll to pay them. Pay As You Earn (PAYE) is a mechanism for deducting income tax on payroll.
If you are an employee you will receive PAYE tax codes from HM Revenue and Customs. These are used by your employer to deduct approximately the right amount of tax from your weekly or monthly salary over the course of the tax year taking into account your personal allowances and benefits in kind you receive. Many employees have incorrect tax codes and can go for years paying too much or too little tax. We can check your PAYE tax code for you.
If you are an employer it is up to you to decide whether or not to apply the PAYE rules. Even though an individual may appear self-employed, depending on the terms under which he or she works you may still need to apply the PAYE rules. This is seldom clear-cut and it is the responsibility of the person making the payment to get it right. Get it wrong and you could find that all payments you have made will be treated as net payments and you will have to pay tax and employees’ national insurance as well as employers national insurance. You may also have to pay interest and penalties. We can help you get it right rather than suffering the consequences of getting it wrong.
If you would like more information about PAYE contact us now.