Pay As You Earn (PAYE) is the HMRC system used by UK employers to deduct Income Tax and National Insurance (NI) from employees' wages. If you employ staff earning £123 or more per week, receiving company benefits, a pension, or state allowances, you must register for PAYE. Even if you don’t need to register, maintaining payroll records is essential.   

Payroll Deductions & Payments 

Employers must deduct tax, NI contributions, student loan repayments, and **pension contributions from employees' salaries, which include wages, bonuses, and statutory payments (e.g., sick pay, maternity pay). 

Reporting & Paying HMRC

Each payday, employers must report pay and deduction to HMRC using payroll software. The system calculates tax liabilities, including the employer’s NI contributions on earnings over £175 per week. Employers can claim reductions for statutory payments in a separate report. 

HMRC Payment Schedule 

PAYE payments are usually made monthly, but small businesses owing less than £1,500 per month can opt for quarterly payments by contacting HMRC's payment enquiry helpline. 

Additional Employer Responsibilities

Employers must report new hires, changes in employee status, and submit annual reports on expenses and benefits at the tax year-end.