PAYE72050 - PAYE operation: payments for PAYE purposes: payment on account

Employers must operate PAYE on any payments made ‘on account’ of PAYE income. That is, payments made before they are due to be paid.

You may need to decide whether a payment is

• On account of earnings, where the employer has no right of recovery, in which case tax should be deducted

Or

• An advance or loan which the employee promises to pay back out of future earnings. Tax should not be deducted from the advance or loan but from the earnings when they are paid