ECH19020 - Free of Tax Payments: FOT Payments - Action to Take Where Part of Pay is 'Gross' and Part is 'Net'
Where payments to employees consist of part ‘gross’ pay and part ‘net’ (free of tax) pay
- form P11(FOT) cannot be used.
The employer should calculate the tax and NIC in accordance with
the example listed in Chapter 2 of the CWG2 (Employers Further
Guide to PAYE and NIC).
Where irregularity is discovered in such cases, the
caseworker should
- explain to the employer how to make any necessary open year adjustments, and
- seek recovery for closed years, if appropriate
Calculation of tax and NIC will depend on whether it was originally agreed by the employer to calculate “Free of tax” or not.
