Upon registration HMRC will send you guidelines on operating PAYE, National Insurance, Statutory Sick Pay and Statutory Maternity Pay (employer’s pack).
In order to calculate the amount of tax and national insurance due by an employee, HMRC will supply you with sets of tables. By reference to ‘’Tax free’’ tables and an employee’s tax code you will be able to calculate the amount of wages or salary that is not subject to tax. The difference between this figure and the gross amount is the employee’s taxable pay. This can then be calculated by reference to another set of tables. The employer’s and employee’s national insurance is calculated by reference to the gross pay with a third set of tables. Special rules exist for the calculation of national insurance for directors.
The tax and national insurance should be paid to HMRC by the 19th of the month following that in which the salaries were paid.
For more tips and advice on starting up a business come along to our next Saturday Surgery where you can pick up a free copy of our 17/18 New Business Kit. More details here.