Why your PAYE changes throughout the year...

One of the reasons many small businesses set up a PAYE scheme is to have better control over their outgoings each month. They know their staff will be paid and they know what’s going out of the bank account.

One of the questions I often get asked by my clients is: with so much certainty in the system and monthly salaries not changing, why does the monthly payroll amount change throughout the year?

If the amount that the payroll changes each month is relatively small, to within a pound or two, it is because the tax tables HMRC uses to calculate income tax don’t use odd pennies. So monthly deductions do vary slightly.

It is not unusual for employees to have incorrect tax codes.  In particular, they may not have notified the tax office of changes in their circumstances that would affect their tax position, such as changing jobs and / or losing the benefit of a company car, or they may have started investing in a pension.

Needless to say, the overall salary amount people get paid over the year evens out, but this is why you need to approve your payroll amounts each month and why they may be slightly different.

If you think your PAYE code might be incorrect or you’d like it checked, let us know, as it is much easier to rectify mistakes before the tax year ends.

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