Employers are required to send details of their payroll payments to HMRC under teh Real Time Information system, where HMR are notified of Pay, tax, National Insurance and student loan amounts immediately before each pay day. It is customary to use professional software to do the computations and submissions to HMRC for you.
If you only have a few employees you can do your own payroll.
The simplest way to do this is to use the free Basic PAYE tools from HMRC's website.
Tax and National Insurance Deductions are computed under PAYE differently.
National Insurance is calculated on each pay day separately. The appropriate fraction of the yearly exempt amount is taken off the pay, then the relevant fraction of the zero rated pay, and unless the pay is high the balance is subject to National Insurance Deductions at the appropriate rate (currently 11% for the employee and 12.8% for the employer)
Tax is usually worked out on the total pay to date since the previous 5th April, and from this total to date the tax already paid is deducted leaving a tax due this payday. Again a relevant fraction of the yearly exempt amount, usually called Free Pay is deducted from the pay to date and the balance charged at the appropriate fractions of the yearly figures for each tax rate.
Johnson Tax can help you with all these calculations.
For more information contact Will Johnson on 07967 522374.
