... and journals that will be of value to the Directors of AC Ltd when making future decisions. PART 1 EMPLOYMENT TAX IMPLICATIONS i) PAYE Procedures on Employing Staff Emolument payments (which are cash payments other than expense payments) made to employees and directors by UK employers are subject to Pay As You Earn (PAYE). PAYE is based on the Income Tax (Employments) Regulation 1993. To calculate PAYE, the Inland Revenue (IR) issues tax codes that determine the amount of deductions for each employee. It is the responsibility of the employer to calculate NIC and tax payments. Details of the tax codes can be found in appendix 1. PAYE thresholds (level of earnings at which tax becomes payable) can be found in appendix 2. At year end (for PAYE the year end is 19 May) the following forms need to be returned to the IR by the employer: * P35 - Employers Annual Return which ...

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