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Taxation of Pay: Overview

It is worth taking a little trouble to understand the main features of the taxation of pay. Breaking the rules even inadvertently can lead to time-consuming investigations, as well as potentially expensive penalties. And on a more positive note, there could be scope to remunerate employees – and possibly yourself - in ways that may be more tax efficient than straight-forward salary.

Setting up efficient regimes for record keeping for all PAYE and related matters is essential. For example, you can avoid many difficulties with travelling and other expenses simply by understanding the rules and keeping good records.

Benefits in kind as well as shares schemes can open up the possibility of rewarding employees tax efficiently, although you need to know how best to integrate them into your pay structure so that they are fair as well as fiscally effective.