As an employer operating PAYE as part of your payroll, you need to complete certain tasks during each tax month. Tax months run from the 6th of one month to the 5th of the next.
You must tell HM Revenue and Customs (HMRC) if you’ve not paid any employees in a tax month.
On or before your employees’ payday
Every time you pay your employees, use your payroll software to:
Record their pay - include their salary or wages and any other pay.
Calculate deductions from their pay, like tax and National Insurance.
Calculate the employer’s National Insurance contribution that you’ll need to pay on their earnings above £166 a week.
Produce payslips for each employee (you can use different software if yours does not have this feature).
Report their pay and deductions to HMRC in a Full Payment Submission (FPS).
If you pay an employee less than £118 a week, you usually only need to record and report their pay (unless they have another job or receive a pension).
In the next tax month (starting on the 6th)
You can view what you owe from your FPS online from the 12th.
Claim any reduction on what you’ll owe HMRC (for example statutory pay) by sending an Employer Payment Summary (EPS) by the 19th.
View the balance of what you owe in your HMRC online account, within 2 days (or by the 14th if you sent the EPS before the 11th).
Pay HMRC by the 22nd (or the 19th if paying by post) - you may have to pay a penalty if you do not.
If you usually pay less than £1,500 per month, you may be able to pay quarterly instead of monthly. Contact the payment helpline to find out.
Late, missing or incorrect payroll reports can also affect your employees’ income-related benefits, such as Universal Credit.
HMRC will close your PAYE scheme if you’re a new employer and you do not send a report to or pay HMRC in 120 days.