UK Payroll Compliance Map

UK Payroll Compliance Map

E-mail: lon4ww@evershinecpa.com
Ms. Anny Lin, speaks both English and Chinese.
WeChat: annylin8008
Skype: annylin8008

WWT – United Kingdom Payroll Income Tax Deduction

WWT-UK-01 WWT Tax Entity

Question from client:
Is the United Kingdom salary income tax levied in national or locals? Or both national and locals?

Are the national and local personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Payroll income tax is imposed only at the national level.

Range of Annual Taxable Income (GBP) Range of Annual Total Income including Standard Personal Allowance (GBP) Income Tax Rate Name of Tax Bracket
0-37,500 0-50,000 20% Basic Rate
37,501-150,000 50,001-150,000 40% Higher Rate
150,001 and above 150,001 and above 45% Additional Rate

Employees in the United Kingdom can earn an amount of income each year that is excludable from income tax, and this amount is known in the United Kingdom as a personal allowance.
As per the availability of the personal allowance, the United Kingdom’s income tax brackets are commonly presented by the government in two ways, one with only taxable income included, and one with the standard personal allowance included as part of overall income.

WWT-UK-02 Registration

Question from client:
The United Kingdom salary income tax collection is under the jurisdiction of which government unit?

The registration of the United Kingdom salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate
What is the advance certificate number? Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
Pay As You Earn (PAYE) is administered by HM Revenue and Customs (HMRC).
PAYE is HMRC system to collect Income Tax and National Insurance from employment.
You must register as an employer with HMRC before the first payday.
It can take up to 5 working days to get your employer’s PAYE reference number.
New employers must register with HMRC and can do so up to 4 weeks in advance of the first pay day.
After registering, an employer will receive a reference number and an Accounts Office reference number from HMRC.
This is required to register for PAYE online if you didn’t get a login when you registered as an employer.
Limited company with 1 to 9 directors can register online via https://www.tax.service.gov.uk/eligibility-for-paye/one-director-national-insurance

WWT-UK-03 WWT Order (OD)

Question from client:
What is the order of United Kingdom salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?

Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms.

WWT-UK-04 Mechanism of Filing (MOF)

Question from client:
United Kingdom’ salary income tax withholding declaration (information flow determines the tax base)

What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:

Full Payment Submission (FPS)

Under the United Kingdom’s PAYE in real-time or Real Time Information (RTI) system, an employer must send information to HMRC online about deductions and payments on or before an employee is paid via a return called a FPS.
Employers can send the FPS using the below 2 methods:

  1. using payroll software
  2. Basic PAYE Tools (for less than 10 employees)

Employers must electronically submit the information in real-time using the PAYE Online service provided by HMRC.
Hence, an employer must have a login for PAYE Online at https://www.access.service.gov.uk/login/signin/creds.
FPS will be paid monthly unless the average monthly payments are likely to be less than £1,500 per month, then it will be paid quarterly.
However, FPS must be filed on or before each payday.
In the U.K., the tax month starts on the 6th day of a calendar month and ends on the 5th day of the next calendar month.

Employer Payment Summary (EPS)
Sometimes you will need to send an FPS and an EPS at the same time.
You must tell HMRC if you haven’t paid any employees in a tax month, by send a “No payment due” report. No need to send an FPS in this case.
If you have payroll software that can’t send an EPS, use Basic PAYE Tools alongside it to send your EPS.
In the U.K., the tax month starts on the 6th day of a calendar month and ends on the 5th day of the next calendar month.
An EPS must be paid by the 19th of the following tax month by post or by 22nd of the following tax month if electronically.

Other filing

An employer must provide each employee and pension recipient with a year-end summary of total pay, taxes, NICs and deductions in either electronic or paper form by May 31. This requirement remains the same under RTI.
The form that must be used for transmitting this information to employees is Form P60, End of Year Certificate.

Employers generally must report for each employee data regarding benefits in kind the employee was provided from April 6 of one year to April 5 of the next year using Form P11D, Expenses and Benefits, which is due by July 6 following that period.
For each employee, a copy of the employee’s Form P11D must be provided to the employee and a copy must be provided to HMRC by the due date of July 6.

WWT-UK-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the United Kingdom salary income tax withholding payment (funding flow)?

Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
You must pay your PAYE bill to HMRC by the 22nd of the next tax month if you pay monthly or the 22nd after the end of the quarter if you pay quarterly.
Make payment via https://www.tax.service.gov.uk/pay/sign-in?traceId=38868927
Several payment methods include:

  1. Online or telephone banking (Faster Payments)
  2. CHAPS
  3. through your online bank account
  4. by debit or corporate credit card online
  5. Bacs
  6. at your bank or building society (cash or cheque)
  7. Direct Debit
  8. by cheque through the post

BNF – Deduction of Employee Social Welfare

BNF-UK-01 BNF Entity

Question from client:
United Kingdom’s social insurance, medical insurance, pensions, and another employee social welfare levy, is it national? Is it locals?

Or is there a national plus local? If there is a national and locals, are they levied separately?
Or levied together? What is the withholding tax rate?

Answer from Evershine RD:
U.K. social insurance scheme is levied at a national level.
Class 1 Category A of National Insurance rates for 2022 to 2023:

Limit Earnings (GBP) Employee Employer
Lower Earnings Limit 123 to 190 a week (533 to 823 a month) 0% 0%
Primary Threshold to Upper Earnings Limit 6 April 2022 to 5 July 2022
190.01 to 967 a week
(823.01 to 4,189 a month)
6 July 2022 to 5 April 2023
242.01 to 967 a week
(1,048.01 to 4,189 a month)
13.25% N/A
Secondary Threshold to Upper Earnings Limit 175.01 to 967 a week
(758.01 to 4,189 a month)
N/A 15.05%
Above Upper Earnings Limit Above 967 a week
(Above 4,189 a month)
3.25% 15.05%

BNF-UK-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?

Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country?
Paper certificate number application? Or online account application? Website?
Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:
PAYE (Pay as You Earn) is the system that HMRC use to collect National Insurance contributions (NICs) from employees’ pay as they earn it.
Employer must have a National Insurance number and a letter category from every employee.
There are many different letter categories, but Category A is the most common one which covers men and women over age 16 but under state pension age who have not opted out of the State Second Pension.
You must register as an employer with HMRC before the first payday.
It can take up to 5 working days to get your employer’s PAYE reference number. New employers must register with HMRC and can do so up to 4 weeks in advance of the first pay day.
After registering, an employer will receive a reference number and an Accounts Office reference number from HMRC.
This is required to register for PAYE online if you didn’t get a login when you registered as an employer.
Limited company with 1 to 9 directors can register online via https://www.tax.service.gov.uk/eligibility-for-paye/one-director-national-insurance

BNF-UK-03 BNF Order (OD)

Question from client:
What is the order of the withholding declaration of social welfare for United Kingdom employees (information flow determines the tax base) and payment (fund flow)?

Pay first and then declare? Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Same Period: Report and pay at the same time.

BNF-UK-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for United Kingdom employees (information flow determines the tax base)?

Reporting cycle: every month? Every bimonthly? Every season? Every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Web site URL?

Answer from Evershine RD:
The United Kingdom has instituted a new system, PAYE in real time or Real Time Information (RTI).
Under this system, an employer sends information to HMRC online about deductions, including Class 1 NICs, and payments each time an employee is paid in a return called a Full Payment Submission (FPS).
Employers must electronically submit the information in real time using the PAYE Online service provided by HMRC.
An employer must provide each employee and pension recipient with a year-end summary of total pay, taxes, NICs and deductions (Form P60) in either electronic or paper form by May 31. This requirement remains the same under RTI.

BNF-UK-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for United Kingdom employee social welfare withholding contributions (funds flow)?

Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Payments made electronically to HMRC of Class 1 NICs is due by 22nd of the month following the end of the tax month or quarter to which they relate.
If the 22nd falls on a weekend or a bank holiday, the payment must reach HMRC on the previous bank working day.
Payments by check through the mail must be posted early enough to reach HMRC no later than the 19th of the month following the end of the tax month or quarter to which they relate.
Employers with at least 250 employees must make monthly remittances electronically.
Make payment via https://www.tax.service.gov.uk/pay/sign-in?traceId=38868927

Several payment methods include:

  1. Online or telephone banking (Faster Payments)
  2. CHAPS
  3. through your online bank account
  4. by debit or corporate credit card online
  5. Bacs
  6. at your bank or building society (cash or cheque)
  7. Direct Debit
  8. by cheque through the post

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

London Evershine BPO Service Limited Corp.
E-mail: lon4ww@evershinecpa.com
Ms. Anny Lin, speaks both English and Chinese.
WeChat: annylin8008
Skype: annylin8008

For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4lon@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Email address: dalechen@evershinecpa.com
Linkedin address: Dale Chen

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