Introduction To Payroll Systems - Qp3

PAYE is the process by which employers deduct income tax from the wages and salaries of their employees and pay over to HMRC.

The tax year starts on 7 April and ends on the following 6 April.

The PAYE code is constructed by adding together the reliefs and allowances, and deducting restrictions for benefits.

If the figure for tax payable this payday is negative, this means that a refund is due to the employee.

The National Insurance scheme is run by Department for Work and Pensions but the payment of benefits is administered by the HMRC.

All employees whose earnings are not less than a certain amount pay national insurance contributions - no exceptions.

Employers’ NI contributions are an extra cost to the employer. They must be deducted from the employee’s pay.