PAYE: the basics

Employer's responsibility for PAYE

If you employ people, including any directors of a limited company, you will need to deduct any income tax and National Insurance contributions (NICs) they owe from their pay, before they receive it.

As an employer, you need to know how to calculate the correct income tax deductions, taking account of the various rates, allowances and limits that exist. For more information, see our guide on income tax rates and allowances.

By the 19th of each month - or, if you make electronic payments, by the 22nd of each month - you will have to send the most recent amounts you have deducted from all your employees' pay to HM Revenue & Customs. If your average monthly payments are likely to be less than £1,500 you may be able to pay them quarterly.

Employees and directors are also taxed on benefits in kind - such as a company car or medical insurance, and as an employer you will have to pay Class 1A NICs on benefits as employer. You do not have to pay these contributions under the PAYE (Pay As You Earn) system - you do so at the year end. See our guide on taxable benefits.

You can also manage your PAYE online using PAYE Online for Employers. Once registered you can complete form P11D using either third party software or HM Revenue & Customs' free 'Online Return & Forms - PAYE' product. Read about and enrol for PAYE Online for Employers.

Alternatively, you can download form P11D from the HM Revenue & Customs website (PDF).

Subjects covered in this guide

• Introduction
• Employer's responsibility for PAYE
• Getting started with PAYE
• When to apply PAYE
• Employee tax codes
• PAYE forms - and when to use them
• Where to get further information on PAYE

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