Introduction to Income Tax and NICs Pay As You Earn and income tax
exactly three units of 500, then at stage 1 multiply the figure in the box by 2, and at stage 2 look up 500.
When applying a tax code which is non-cumulative (Week 1 / Month 1 basis), use the pay adjustment figures given against the employee’s code in Week 1 or Month 1 of the Pay Adjustment Tables, regardless of the actual week or month of the payment. Ignore the total pay to date and apply the pay adjustment to the pay due in the current pay period only.
If there is more than one pay day in any one week or month, then give only one amount of pay adjustment for the week or month.
If regular pay days are not weekly or monthly intervals, then it may be necessary to use the Pay Adjustment Tables for weeks other than those in which the payments are made. There is more information about how to do this in the ‘ Employer Further Guide to PAYE and NICs – CWG2 ’ .
Obtaining the taxable pay
To find the taxable pay, follow these steps.
• For tax codes with a suffix. subtract the pay adjustment figure (that is, the tax-free pay) from the total pay, then follow the taxable pay table instructions below; if the pay adjustment to date is more than the total pay, then no tax is due • For tax codes with a K (or SK) prefix, add the pay adjustment figure (that is, the additional pay) to the total pay
• Round the result down to whole pounds (disregard any pence) For example, a result of £76.59 rounds down to £76.
When tax is operated on a cumulative basis, add the gross taxable pay to date figure from the previous pay period to obtain the gross taxable pay to date figure for this pay period.
5.9.2 Taxable Pay Tables
The Taxable Pay Tables – Manual Method – Tables B to D (April 2023) booklet includes Scottish rate tax tables and Welsh rate tax tables, in addition to those for the ‘rest of the UK’ (rUK). It is used from the first pay day on or after 6 April 2023. The booklet is available at https://www.gov.uk/government/publications/taxable- pay-tables-manual-method. The Tables A – Pay Adjustment Tables booklet can normally be used from one year to the next. However, occasionally HMRC adds content or corrects errors so the latest booklet should be used. The latest version, which was published in March 2019, includes Welsh tax codes; it is available at https://www.gov.uk/government/publications/tables-a-pay-adjustment-tables.
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