PAYE Services Leicester

PAYE or Pay As You Earn is HM Revenue and Customs’ system to collect the payment of Income Tax and National Insurance from employment.

Employees who are paid via Payroll will invariably be subject to PAYE deductions such as Income Tax, National Insurance, Pension Contributions and Student Loan payments at source. This means that the Employer is responsible for ensuring these deductions are paid directly to HMRC on the Employee’s behalf as part of the Payroll calculations before the Employee receives their net pay (the amount they receive after all deductions have been made).

As an Employer running your own Payroll, as well as completing all necessary calculations you will need to complete regular Employer Intermediary reports and declare all Employee PAYE payments and deductions to HMRC. As part of this regular reporting, you should also inform HMRC of any significant changes to the Payroll such as when an Employee joins/leaves, or inform of any changes in circumstance such as when an Employee becomes a Director or reaches State Pensionable age - PAYE is also used to collect Income Tax from the Pension income of those individuals who continue to work…..

It’s not all doom and gloom though as not all earnings are liable to Income Tax.

For example you won’t necessarily pay Income Tax on mileage allowance up to HMRC approved rates if you use your own car for work. Certain payments for extra household costs can also be Tax Free if you regularly work from home by arrangement with your Employer. There are also certain Lump Sums such as Armed Forces pension gratuities and certain injury compensations resulting in you being unable to work which are also Tax Free so feel free to give us a call if you are unsure whether payments applicable to you attract Income Tax or are Tax Free.

We Can Help With PAYE

The above is only meant to be a very brief overview of the PAYE system but if you have any specific questions regarding your PAYE concerns or you would like Barnstone Accountancy to help with any PAYE related issues then please feel free to contact us by either pressing the “Contact Us” button or via the contact details listed below.

No fuss, jargon free and easy to understand

PAYE Services FAQs

1. What deductions are made under PAYE?

Under the PAYE system, common deductions include Income Tax, National Insurance contributions, student loan repayments, and any workplace pension contributions. These are automatically taken from an employee’s wages before they’re paid. Using professional PAYE services helps ensure deductions are accurate and submitted on time giving peace of mind to both employers and employees.

2. How does PAYE service work?

The Pay As You Earn (PAYE) system is used by employers to deduct Income Tax, National Insurance, and other relevant contributions from employees’ wages. 

Employers then report these deductions to HMRC on or before each payday. A PAYE service ensures these deductions are calculated correctly, submitted promptly, and paid over to HMRC in line with current tax rules.

This includes setting up and running your PAYE scheme, issuing payslips, submitting real-time information (RTI) to HMRC, and advising on tax codes or employee changes. 

3. How do I register for PAYE as an employer?

To register for PAYE as an employer, you must register with HMRC before your first payday, even if you're only employing yourself as a company director. Registration can take up to 20 working days, so allow time for processing. 

You can’t register more than 2 months in advance. If you need to pay staff before receiving your PAYE reference, run payroll, store your Full Payment Submission (FPS), and send it to HMRC once your reference is received. 

4. What happens if I make mistakes in PAYE submissions?

Mistakes in PAYE submissions can lead to incorrect tax being paid, employee confusion, and possible penalties from HMRC. However, errors can often be corrected through amended submissions or by contacting HMRC. To reduce risk and ensure accuracy, many businesses in Leicester rely on professional PAYE services for ongoing payroll support and peace of mind.

5. How can I set up a PAYE scheme in Leicester?

To set up a PAYE scheme in Leicester, start by registering as an employer with HMRC and getting access to PAYE Online. 

• You’ll need to choose payroll software to record employee details, calculate pay and deductions, and report to HMRC. 

• Before the first payday, you must collect and keep records, tell HMRC about your employees, and report their pay. 

• You’ll also need to pay HMRC the tax and National Insurance owed. 

6. When should I register for PAYE? 

You should register for PAYE before your first payday if any of your employees meet certain conditions in the current tax year (since 6 April). This includes if they’re paid £123 or more per week, receive expenses or benefits, get a pension, or have had another job or received certain benefits. Even if registration isn’t required, you must still keep payroll records. Many employers choose payroll support for Leicester businesses to ensure they’re meeting all HMRC obligations from day one.

7. Do I get money back from PAYE?

Yes, if you’ve overpaid tax through the PAYE system, you may be eligible for a refund. This can happen if you’ve changed jobs, worked part of the year, or had multiple employers. HMRC usually issues refunds automatically, but you can also apply directly. A professional PAYE service can help ensure tax codes are correct and highlight any refund opportunities.