PAYE – Issues for Employers and Employees.

Employers

If you employ staff, you have obligations to the Inland Revenue. If you ignore these obligations, penalties and interest will soon be added to your employment costs! Most penalties arise if you either: miss certain statutory deadlines for remitting tax and national insurance you have deducted from your employees, or are late submitting returns to the Inland Revenue. Unfortunately ignorance is not bliss - make a late payment or forget to send off a particular return and you will be penalised

Employee Benefits.

If you provide employees with benefits, for example company cars and health insurance; be sure to watch out for the following:

• Identification is difficult – sometimes seemingly unrelated expenditure can be classified as a benefit, for example excessive staff entertaining.
• Benefits attract their own national insurance charge which has to be paid by employers in July each year.
• Benefits have to be declared to the Revenue on specific returns which must be submitted on time to avoid penalties.

Employers – other points of interest.
Small businesses are able to pay their deductions quarterly rather than monthly - this can help with cash flow especially for new ventures.

Employers have to make their own national insurance contributions based on salary levels. This is added to tax and employees national insurance deductions when paid to the Inland Revenue each month/quarter.