ECH20005 - Net Pay Arrangements: Deductions from Gross Pay Before Tax

Employers may recover money due from their employees by making deductions from their wages. PAYE should be operated on the gross pay unless the deduction is confined to one of the following net payment arrangements

• a successful salary sacrifice. See EIM42750
• payroll giving scheme ECH20010
• approved or (from 6-4-2006) registered pension schemes. See RPSM 05101340 onwards.

If the employer has incorrectly operated PAYE on a net pay figure you should

• explain that the gross pay figures should be taxed
• explain how to make any necessary open year adjustments ECH9010 and
• extend the compliance check where the criteria at ECH8030 are satisfied.