PAYE – Issues for Employers and Employees.


If you employ staff then you will have statutory filing deadlines to meet for filing forms and making payments to HM Revenue & Customs (HMRC).

If you ignore these obligations, you will soon see the cost of your employment costs rocket with penalties for late filing along with daily interest being added. With the introduction of automated systems HM Revenue & Customs are getting stricter than ever before. Penalties are now issued and arise when employer return forms are submitted late or when the tax and National Insurance deducted from employees’ wages are paid late to HMRC.

Employee Benefits in kind

Are you sure of what benefits are taxable for employees? Do you know the correct rate for national insurance to tax benefits in kind on?

If you provide employees with benefits, for example company cars, rental accomodation and small loans, be sure to watch out for the following:

  • Identification is difficult – sometimes seemingly unrelated expenditure, such as excessive staff entertaining, can be classified as a benefit.
  • Benefits attract their own National Insurance charge, which has to be paid by employers in July each year.
  • Benefits have to be declared to HMRC on specific forms, which must be submitted on time in order to avoid penalties.

PAYE codes

Basically, a PAYE code is made up of numbers and letters and includes personal allowances and any gross deductions.

Providing that you are not on a ‘K’ code, the higher the number in your tax code, the less tax you will pay. If you have a ‘K’ code it means that the deductions in your code exceed your allowances and the higher the number, the more tax you will suffer. A few common errors are:

  • Employers are sometimes slow in sending in details to the tax office when new employees start. This can delay the issue of a correct code number resulting in excessive tax deductions.
  • Employees who change their company cars for lower taxed models, or indeed stop using a company car will continue to be taxed based on last tax year’s information, until the tax office is informed of the change.
  • The tax office will sometimes seek to recover unpaid tax in earlier years by reducing your tax code in the current year. This deduction should always be checked to make sure the arrangement does not duplicate other payments that you may have made directly to HMRC.

The key to maintaining the correct code number is to notify the tax office immediately when changes occur.

Why not outsource your payroll to Livingstones?

We offer the following services which could enable you to concentrate on how you run your own business. Put us to the test we GUARANTEE you our service will not be beaten.

Administering your payroll can be time consuming and burdensome, diverting energy and resources from the core activities of your business. And the task is made all the more difficult by the growing complexity of taxation and employment legislation and the accompanying regime of penalties for non-compliance.

We have dedicated knowledgable and well trained staff who can relieve you of this burden by providing a comprehensive and confidential payroll service, including:

  • Customised payslips, including the option to deliver the payslips direct to the employees inbox
  • Administration of PAYE, national insurance, statutory sick pay, statutory maternity pay, etc
  • Completion of statutory forms, including year end returns, to issue to your employees and submit to the Inland Revenue
  • Summaries and analyses of staff costs
  • Administration of incentive schemes, bonuses, and ex-gratia and termination payments
  • Administration of pension schemes

Looking to find out more?

We consistently monitor our clients business to make sure they are on the right track. We want every business to flourish, therefore, you hear from Livingstones Accoutants more than just once a year.


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