Getting Started With Pay-as-you-earn
Pay As You Earn (PAYE) system is devised by the UK government
, it is under the control of HM Revenue & Customs (HMRC). HMRCs duty is to collect all kinds of taxes and insurances for the UK government. It also collects PAYE in the form of income tax and national insurance contributions from employees pay as they earn it. The UK government has strict rules for all citizens and ensures the implementation of laws to maintain stability. The PAYE policies also apply on the UK wholesale market, wholesalers, manufacturers, distributors and on their employees as well as.
According to HMRCs policies, the wholesale suppliers, manufacturers,
Distributors and other entrepreneurs, who earn above a certain threshold, are responsible to deduct tax and national insurance contributions from their employees pay. Wholesale suppliers are to pay the amounts to HMRC on monthly or quarterly basis, failing to which causes the wholesaler to pay the dues with interest. In worst cases scenario, if he is found guilty of adopting illegal tax evading tactics, the offender is given civil penalty. In the end of every fiscal year, the wholesale suppliers also have to send an Employer Annual Return to HMRC online.
Wholesalers' responsibility for PAYE:
As said earlier, that the UK government has quite strict laws and rules for implementing tax generating polices, so it is a legal obligation for all wholesale suppliers to implement PAYE policies on the employees whose salary reach the National Insurance Earnings minimum Limit. For the Fiscal year 2010-11, 421 per month or 5,044 per year is the lower limit of National Insurance Earnings. So, the employees earning more than or equal to this amount, fall in PAYE policies. By the 19th or, if the supplier makes electronic payments, 22nd of each month, HMRC must received the payments. If the monthly payment is less than 1,500, payments can also be made on quarterly basis.
Now the question arises, what payments does PAYE apply to? It applies to all those payments that an employee receives in the form of salary, wages, overtime, shift pay, bonuses, commission, allowances paid in cash, sick pay, maternity, paternity and adoption pay. Different NICs and tax policies also apply on expenses and benefits like company cars and/or medical insurances provided to employees.
Getting started with PAYE:
According to the business laws, when you hire employees, you are bound to get register with HMRC as an employer. After registration, you will receive a letter from HMRC containing employer PAYE reference and links to the HMRC website, from where you can download forms and all other information related to PAYE. Just fill in the forms with complete details of your company and of employees and submit it to the HMRC. All other details can be obtained from HMRCs website.
These policies should not be taken as a burden by wholesale suppliers, distributors, manufacturers, other entrepreneurs or their employees. The amount you would pay is rather meant to help the UK have a stable and strong economy.
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