PAYE | Edward Harris Chartered Certified Accountants
PAYE, or Pay As You Earn, is the system UK employers use to deduct income tax and National Insurance from employees' wages.
This guide covers the latest rules, common mistakes, and practical steps to ensure compliance for your business.
Understanding PAYE and Its Legal Basis
PAYE is governed by the Income Tax (PAYE) Regulations 2003 and various Social Security Acts.
Employers must keep records available for HMRC on request to comply with legal obligations.
The system helps ensure timely tax collection and reduces the burden on employees.
New Joint Liability Rules from April 2026
New joint liability rules for PAYE are set to be introduced from April 2026.
These rules transfer PAYE risk upwards in supply chains, holding larger entities accountable for compliance errors.
Common errors can lead to fines, making it crucial to review your processes.
Digital Filing Penalties and Common Pain Points
HMRC updates include penalties for late digital filings under Making Tax Digital.
'Soft landing' periods offer temporary relief, but businesses often struggle with timely submissions.
Community insights reveal common pain points such as missed deadlines and technical issues.
IR35 Threshold Changes and PAYE Alternatives
IR35 small company threshold changes are effective from April 6, 2026.
The turnover threshold increases from £10.2m to £15m, and the balance sheet threshold from £5.1m to £7.5m.
This reclassifies 14,000 companies as small, exempting them from IR35 rules and providing alternatives to traditional PAYE for contractors.
Reducing PAYE Compliance Costs and Reform Efforts
Parliament’s Business and Trade Committee recommends a 25% cut in tax compliance costs for small businesses.
They suggest increasing the roll-out period for Making Tax Digital for income tax and improving HMRC's call answering rates.
Reforms aim to reduce the burden and encourage business growth.
Ready to Manage PAYE with Confidence?
Edward Harris offers tailored payroll services to help you handle PAYE compliance efficiently and avoid penalties.
Book a free consultation with our Chartered Certified Accountants to ensure your business stays on track.
