As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.
When paying your employees through payroll you also need to make deductions for PAYE. Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay. From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.
If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday. You’ll need to send another report to claim any reduction on what you owe HMRC, eg for statutory pay.
As part of your regular reports, you should tell HMRC when a new employee joins and if an employee’s circumstances change, eg they reach State Pension age or become a director. You have to run annual reports at the end of the tax year – including telling HMRC about any expenses or benefits.