Employment Tax

Monthly compliance

Produced by Tolley in association with Vince Ashall
  • 29 Nov 2021 11:01

The following Employment Tax guidance note Produced by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Monthly compliance
  • Attachment of earnings orders
  • Quarterly reporting
  • Pension contributions
  • Other deductions

Monthly compliance

Monthly compliance is generally concerned with PAYE compliance, although an employer may also need to comply with other legislation.

PAYE compliance is concerned with paying over to HMRC the correct amounts of tax, national insurance (employees’ and employer’s) and student loan deductions. This has taken on more importance under real time information (RTI), as HMRC will calculate what they think is due from the full payment submission (FPS) and employer payment summary (EPS) submissions for each tax month.

To assist with PAYE compliance, regular reconciliation of tax, NIC, student loan and postgraduate loan deductions and statutory payments recovery should be undertaken. This should be on a tax month basis.

See Example 1.

Any monthly deductions required from payments made to subcontractors under the construction industry scheme (CIS) must be included with monthly payroll remittances and should therefore also be included in regular monthly reconciliations. See the CIS ― contractors guidance note.

After the analysis of the payments to be made to HMRC ‘this period’, the payments should also be reconciled against the cumulative year to date figures. This is to ensure that no errors have occurred, eg owing to manual adjustments or late payments. Other causes of being unable to reconcile the figures are overpayments and late notification of starters. As these tend to be made outside of the normal payroll cycle, it is easy for the additional tax and NIC deductions to be overlooked and excluded from the totals.

Whilst practical difficulties may sometimes occur when undertaking monthly reconciliations, employers are now able

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