Introduction to PAYE

HMRC PAYE jpegAs an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

You do not need to register for PAYE if none of your employees are paid £120 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.

Payments and deductions

When paying your employees through payroll you also need to make deductions for PAYE.

Payments to your employees

Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay.

Deductions from their pay

From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.

Reporting pay and deductions

If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday.

Your payroll software will work out how much tax and National Insurance you owe, including an employer’s National Insurance contribution on each employee’s earnings above £170 a week.

You’ll need to send another report to claim any reduction on what you owe HMRC, for example for statutory pay.

Paying HMRC

You’ll be able to view what you owe HMRC, based on your reports. You then have to pay HMRC, usually every month.

If you’re a small employer that expects to pay less than £1,500 a month, you can arrange to pay quarterly – contact HMRC’s payment enquiry helpline.

Other things to report

As part of your regular reports, you should tell HMRC when a new employee joins and if an employee’s circumstances change, for example they reach State Pension age or become a director.

You have to run annual reports at the end of the tax year – including telling HMRC about any expenses or benefits.

More details can be found here

State Pension Update

state pensionIn November 2018, State Pension age was 65 for men and women.  The State Pension age is regularly reviewed to make sure that the State Pension is affordable and fair.  People are living longer, and spending a larger proportion of their adult life in retirement than in the past.  State Pension age is gradually increasing for men and women, and will reach 67 by 2028.

Proposed new timetable for State Pension age increases

The government has announced plans to bring this timetable forward. The State Pension age would therefore increase to 68 between 2037 and 2039.

Your date of birth How the proposals affect you
On or before 5 April 1970 No change
Between 6 April 1970 and 5 April 1978 Your State Pension age is currently 67. It would increase to between 67 years and 1 month, and 68 years, depending on your date of birth
After 6 April 1978 No change. Your State Pension age remains 68

These proposed changes would have to be approved by Parliament before they are agreed.

When can I retire?

Your State Pension age is the earliest age you can start receiving your State Pension.  Use the link below to check:

  • when you’ll reach State Pension age
  • your Pension Credit qualifying age
  • when you’ll be eligible for free bus travel

Click here to start

Check your State Pension forecast to find out how much money you’ll get

Working after State Pension age

  • You can keep working past your State Pension age.
  • You can usually work for as long as you want to. ‘Default retirement age’ (a forced retirement age of 65) no longer exists.
  • You don’t pay National Insurance if you work past State Pension age.
  • You could pay tax – it depends on the size of your total income.

You can find more information here