Every business which employs staff will have to file year end employer
returns form P35, along with forms P14. The year end employer returns have
strict statutory deadlines. These businesses will also need to make monthly or
quarterly payments of PAYE and National Insurance (NIC) to the Her Majesty
Revenue and Custom(HMRC).
Penalties and interest would be due to HMRC for not meeting the PAYE and
National Insurance (NIC) deadlines.
Where the employees are provided with benefits in kind, such as company cars
company fuel, telephone line at home, medical insurance, then declaration of
these needs to be made on form P11D on strict HMRC deadline.
There may be NIC implication through payroll. Benefits in kind give rise to
class 1A National Insurance (NIC) charge, the payment of which to the (HMRC) by the employers falls in July.
PAYE and National Insurance deductions for any employee is based on the
salary, tax and NIC rates and their personal PAYE code. The PAYE code can be made up of their personal allowances less deductions such as, benefits in
kind, outstanding tax and other untaxed income. Where deductions exceed the
personal allowances, the employee ends on a ‘K’ code. In simple terms, a ‘K’
code is quite the reverse of an allowance hence giving rise to further PAYE.
It is important to ensure that the PAYE Codes raised by the HMRC are checked for accuracy to ensure correct payroll accounting and that only the correct PAYE deduction is made from the employees’ salary. It is also important to
ensure that the PAYE codes are up to date for changes such as those in
relation to benefits in kind. Notifying changes to the tax office in manner
ensures correct PAYE codes and as a results correct PAYE and NIC deductions. Outsourcing payroll services to us benefits your business to comply with HMRC’s regulations and deadlines. We can also assist you with PAYE and NIC compliance HMRC visits, investigations and enquiries.