The following Employment Tax guidance note Produced by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:
Under PAYE, income from employment is subject to deductions of income tax and NIC in addition to other deductions. Income from employment includes basic pay, overtime, bonus payments, shift payments, regional payments such as London Weighting, tips, and gratuities. This list is not exhaustive. Also included as income is any incidental benefit of any kind obtained by the employee if it is money or money’s worth, or if the employer has registered for voluntary payroll of benefits. See the Non-cash earnings ― overview and Voluntary payrolling of benefits in kind guidance notes.
The total of the individual items of pay that make up employment income is normally called ‘gross pay’.
See Example 1.
Benefits in kind (BIK) are usually dealt with under the benefits code and, unless payrolled, are reported at year-end under the P11D procedures. See the Voluntary payrolling of benefits in kind and Year-end benefit reporting guidance notes.
The value of gross pay as defined in the first paragraph above is normally the same value as taxable pay.
PAYE allows for certain deductions to be made from earnings to arrive at gross pay for PAYE purposes. These are:
share incentive payments
tax exempt benefits and expenses
Higher or additional rate taxpayers who pay pension contributions subject to the relief-at-source method will need to claim further tax relief due through their self assessment returns as relief at source is given at the basic rate.
Taxable payments that are not dealt with through the payroll are reflected in the employee’s tax code. See the Notices of coding guidance note.
Allowable pension contributions are those made to a registered occupational pension scheme that operates the net pay arrangement. Under this arrangement, the pension contributions are deducted from gross pay before the income tax calculation is made. Without registration with HMRC, a pension scheme cannot benefit from the tax privileges given to registered pension schemes. For registered schemes, both the employee and employer can obtain tax relief on
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
This note offers guidance in respect of the administration of company tax returns. If a company or organisation is subject to corporation tax they will have to complete and file a company tax return for each accounting period. A company or organisation must, in the main, file a return even if they
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
This guidance note provides details of quarterly instalment payments (QIPs) for corporation tax purposes and which companies need to pay their tax liabilities in this manner.Generally, corporation tax is payable nine months and one day after the end of the relevant accounting period. However, large
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.