As an employer, you need to work out and record the correct amount of tax and National Insurance on holiday pay for your employees.
What to report and pay
If you continue to pay an employee as normal while they’re on holiday, this isn’t a benefit. It just counts as normal earnings. Continue to deduct and pay PAYE tax and Class 1 National Insurance through payroll.
There are different rules if you provide holiday pay in advance, or run any special holiday pay schemes. Read HM Revenue and Customs’ guide to holiday pay and PAYE.
The following guides contain more detailed information: