Employer's Duties Before Income Tax Year Commences
1. Issue of PAYE documents to employers
An employer should be in a position at the start of each new income tax year to make correct PAYE deductions on and from the first pay day, which falls in that year.
In November/December of each year employers will be notified of the tax credits and standard rate cut-off point for the coming year for each employee.
If, on the first pay day of the new tax year, the employer has not received a tax credit certificate for the new tax year for an employee, a number of options are available:
- Where the cumulative basis of tax deduction is in operation, the employer should use the multi-year certificate (Employer's PAYE records part 6.4 ) received in a previous year provided it has the employer's name on it
- Where the non-cumulative basis (week 1/month 1 basis) is in operation, the employer should use the tax credits and standard rate cut-off point, as advised in the previous year's non-cumulative tax credit certificate.
- Where the temporary basis of tax deduction is in operation (Calculation of tax under the PAYE system part 7), the employer can continue to use, on a temporary basis, the tax credits and standard rate cut-off point as advised on the P45, provided the P45 relates to the current year or previous year. Otherwise the emergency basis of tax deduction will apply (Calculation of tax under the PAYE system parts 8 - 9) from 1 January until a notification is received.
- Where the emergency basis of tax deduction is in operation, the employer should continue to use the emergency basis on a cumulative basis - see Calculation of tax under the PAYE system part 9.
Where changes in tax credits and standard rate cut-off points are brought about by the provisions of the annual Budget, all employers will be notified, early in the new year, of all employees' new tax credits and standard rate cut-off points.
An employer is legally obliged to deduct tax and pay it over to the Collector General whether or not a tax credit certificate has been received.
2. Employee leaving before beginning of tax year
An employer who receives a tax credit certificate for the coming tax year for an employee who has left the employment or leaves the employment before 1 January should dispose of the certificate in a confidential manner.