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PAYE Payments and Returns
Pay as You Earn (PAYE) income is taxed at source, meaning Limited Companies must calculate and deduct Income Tax and Class 1 National Insurance contributions before a net salary can be paid to the employee. Once PAYE deductions have been made from an employee’s salary they must be paid to the HM Revenue and Customs, normally by the 19th of the month following the month in which PAYE deductions were made.However, it is possible to arrange quarterly PAYE payments where total monthly deductions are less than £1,500. As the majority of limited company contractors are normally the sole director and employee of the company it is likely that this will be the case (where a low salary has been set).
PAYE Payments
PAYE Payments can be made to the HM Revenue and Customs by:- Electronic Transfer (Normally by BACS or CHAPS using Internet Banking or Telephone Banking)
- Debit card over the internet
- Bank Giro at your local Bank Branch
- Cash or cheque at your local post office counter
- Sending a cheque made out to ‘HM Revenue and Customs’ in the post to your Accounts Office
You may pay quarterly where this has been arranged with your HM Revenue and Customs office otherwise you will need to make monthly payment of PAYE deductions
PAYE Returns
PAYE returns must be filed with HM Revenue and Customs at the end of the financial year. You may be required to submit forms:-
P35
An end of year PAYE return that needs to be completed by all employers. The form details the total income tax and national insurance contributions deducted during the previous tax year. It must be submitted to the HM Revenue and Customs by the 19th of May each year P14 and P60
Forms P14 and P60 make up a triplicate form. There are two copies of form P14 and one copy of a P60. The document is an end of year summary for each employee that has worked for an employer. It details total pay for each employee, together with total PAYE tax and national insurance deductions made. Forms P14 must be sent to the HMRC by the 19th May and form P60 should be given to the employee by the 31st May-
P11D
This form details the cash value of all expenses and benefits paid to ‘relevant employees’ in the tax year. A ‘relevant employee’ is someone that has earned at least £8,500 during the tax year (including expenses and benefits). However, all directors who have received expenses should also complete a P11D rather than a P9D. Form P11D must be submitted to the HMRC by the 6th July each year -
P9D
A P9D is similar to a P11D but details employees (not including Limited Company Directors) who have earned £8,500 or less during the tax year. Form P9D must also be submitted to the HMRC by the 6th July each year
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