How does PAYE work?
Once you know which payroll taxes you are required to pay, you need to make sure you meet these obligations.
Pay As You Earn (PAYE) is the system that HM Revenue & Customs uses to collect employment-related taxes, such as Income Tax and National Insurance.
This money is sent directly to HMRC through the PAYE service but to reach this stage, you must do the following:
- Register as an employer
- Choose a payroll software
- Keep all relevant records in a secure location
- Inform HMRC of your employees and provide their details
- Record your employee’s pay and make the necessary deductions, which will need to be reported to HMRC on or before the first payday
- Make sure you pay HMRC the correct amount of tax and National Insurance.
You need to make sure that any payments that are not subject to tax, such as expenses, are removed from this total.
The power of outsourcing
Whilst the PAYE process sounds straightforward, it can be time-consuming.
Factors such as whether the employee needs to repay a student loan, or has received any tax-free benefits will complicate the process further.
But you need to make sure that you are inputting all of the necessary information so that you and your employees fulfil your obligations.
By outsourcing your payroll function, you can save yourself time and energy, which can be diverted to growing your business.
Our professional payroll service allows you to free yourself from the complexities of payroll, and you can rest assured that your dedicated advisor will respond to any queries you may have.
Looking to outsource your payroll? Get in touch.