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PAYE – A Complete Payroll Guide for individuals

At wagecorp we look after the process of PAYE (Pay As You Earn system collects income tax and National Insurance liabilities from employees’ earnings) under a single continuous employment contract.



How the PAYE System Works


As an Employer, wagecorp are responsible for calculating, and collecting taxes owed on our employees earnings.


Every time we pay our employees, details of each payment are sent by wagecorp to HMRC. Any taxes owed by the employees are kept segregated and then paid to HMRC before the relevant deadline.


So, how does the PAYE system affect employees or contractors or wagecorp?


All wagecorp employees and contractors receive payslips for each period they work, which detail the gross income, deductions made and net income. As an umbrella company, wagecorp takes care of the entire payroll administration in several languages.


At the end of each tax year (which runs from 6th April – 5th April), each employee is given a P60 which details their total earnings over the previous tax year, minus any deductions.


All wagecorp documentation including contract of employment, payslips and P60’s are provided in either English, Polish, Romanian, Hungarian and or Bulgarian.


To ensure the correct deductions are taken from each employee and are paid over to the HMRC in the correct manner, payroll information is submitted in ‘real-time’, when we run a payroll.


This is due to the implementation of the ‘Real Time Information’ regime, which was phased in from October 2011 onwards.


Payroll deadlines


Any deductions wagecorp make on behalf of its employees is paid to HMRC monthly as the combined income tax and NIC liability of our employees exceeds the average benchmark of £1,500+.


Payments are always made to HMRC within 14 days of the end of the tax month, which falls on the 5th of each month.


Wagecorp as an umbrella scheme takes care of all payroll administration on behalf of our employees.


Tax Codes


Each employee of wagecorp has a tax code, which tells us how much tax should be deducted from our employees’ earnings.


The most common code for the 2019/20 tax year is 1250L, where the initial digits multiplied by 10 indicate how much personal allowance the individual is entitled to.


Self-Assessment


It is important to note that the PAYE system only deducts tax from wages (i.e. income paid via the payroll system). If any of our employees receive further income on top of their salary, they will have to account for this via the self-assessment system.


The deadline for submitting a tax return, and paying any tax our employees owe is the 31st January following the end of the tax year to which the return relates.


Further Information


To find out more about how wagecorp can assist you as an employee or as a business considering outsourcing a payroll process, please contact wagecorp at info@wagecorp.com or by telephone to +44 (0) 151 370 0545.

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