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PAYE procedures applicable for new or smaller employers

This guidance note sets out a number of payroll considerations which may be particularly relevant for new or smaller employers, and provides appropriate signposting where additional guidance may be found.

Whilst most general PAYE tax and NIC rules apply equally to all employers, there are certain rules and processes which are more likely to be relevant when starting a new payroll, especially if this is a smaller employer.

In making payment to an employee, the PAYE treatment of an item (ie whether or not the payment is subject to tax deduction) is usually matched by the NIC treatment, however this is not always the case. In addition, the methods by which PAYE tax and NIC are actually calculated differ. This document highlights some of the key differences.

For additional explanation of some of the terms used in this and other guidance notes relating to payroll matters, see the A–Z of payroll guidance note. Simon’s Taxes Division E4.11 also provides a more detailed analysis of the