Payroll taxes are deductions made from employees’ wages to cover their income tax, National Insurance contributions, and other government-required deductions. Employers are responsible for withholding these taxes from employees’ paychecks and submitting them to HMRC on their behalf.
In the UK, payroll taxes include:
- Income Tax: Based on the employee’s earnings and tax code, which determines how much tax is due.
- National Insurance (NI) Contributions: Paid by both employees and employers to fund state benefits like pensions and healthcare.
- Student Loan Repayments (if applicable): Deductions are made if the employee has a student loan to repay.
- Pension Contributions: Employees may have contributions deducted for workplace pensions.
Employers must ensure these deductions are calculated accurately and submitted on time to comply with HMRC regulations.
