PAYE income and deductions

Produced by Tolley in association with

Employment Tax

Guidance

Under PAYE, income from employment is subject to deductions of income tax and NIC in addition to other deductions. Income from employment includes basic pay, overtime, bonus payments, shift payments, regional payments such as London Weighting, tips, and gratuities. This list is not exhaustive. Also included as income is any incidental benefit of any kind obtained by the employee if it is money or money’s worth, or if the employer has registered for voluntary payroll of benefits. See the How might non-cash income and benefits be taxed? and Voluntary payrolling of benefits in kind guidance notes.

The total of the individual items of pay that make up employment income is normally called ‘gross pay’.

See Example 1.

Benefits in kind (BIK) are usually dealt with under the benefits code and, unless payrolled, are reported at year-end under the P11D procedures. See the Voluntary payrolling of benefits in kind and Year-end benefit reporting guidance notes.

Taxable pay

The value

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Vince Ashall

Payroll Consultant & Trainer at VA Payroll Services

Involved in payroll for more years than I care to remember! Initially in the NHS, where i oversaw the development of the NHS's bespoke payroll system (SPS Standard Payroll System), and latterly in the private sector. Served for 13 years as a MNT for a private sector defined benefit pension scheme. Have had articles published in payroll publications and and provide updates for various publishers. Fellow of the CIPP and gained a MSc in Payroll & Business Management in 2002. Now a self employed payroll and pensions consultant

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