Whenever you pay an employee, you'll need to work out the PAYE (Pay As You Earn) tax that you need to deduct. You'll also need to enter the relevant figures on the employee's form P11 Deductions Working Sheet.
If you use paper P11s, you can work out the tax due using the free and easy to use calculators available on the HM Revenue & Customs (HMRC) website. Alternatively, you can work out the figures manually using tax tables. Using the calculators will save you time and help you get everything right.
As an alternative to paper methods you might consider using either a commercial payroll software package or HMRC’s free P11 Calculator. Tools like these work out the PAYE figures automatically. They may also let you file your starter and leave information (forms P45 and P46) and your Employer Annual Return (forms P35 and P45) online, a considerable advantage because almost all employers must file this information online.
On this page:
If using paper methods, bear in mind that there are more efficient ways of completing the P11 which will not only save you time but also help you meet important deadlines for filing PAYE online.
These include:
These will work out the figures for you automatically and make it easier for you to file your starter and leaver information and your Employer Annual Return online – which almost all employers must do.
Employer deadlines for filing PAYE online
Using commercial payroll software or HMRC’s downloadable P11 Calculator
A set of Basic PAYE Tools are now available to download straight to your computer. In addition to the P11 Calculator, the tools include:
Download Basic PAYE Tools (Opens new window) from the Business Link website
You can use HMRC’s free PAYE tax calculator available on the HMRC website to work out the tax you need to deduct from each employee's pay. The calculator will also work out the figures you need to put into Columns 3 to 8 of the employee's P11. The calculator works in the same way as the tables. You can use it for all tax codes, including K codes and codes BR, D0, D1 and NT. It will save you the job of using the tables and doing the calculations yourself. But you'll still need to record the entries manually on the P11.
HMRC’s free PAYE tax calculator does have some limitations. For example, you can't use it if you operate a ‘free of tax’ pay arrangement. You can find help with that in the guide ‘Paying an employee on a free of tax basis’ – use the link below.
The calculator won't let you save the results of the calculations directly - but you can copy and paste them into another application to save them.
Paying an employee on a ‘free of tax’ basis
You'll need each employee's P11 Deductions Working Sheet or equivalent and their wage records to work out the tax due using the PAYE calculator.
You'll have to enter the following information for each employee:
If the employee has a K tax code, you're not allowed to deduct more than 50 per cent of their pay in tax. This is known as the 'regulatory limit'. If this limit's exceeded, enter the tax you couldn't deduct in Column 8 of the P11 and deduct it in the next pay period(s).
It's really important to use the right tax code to make sure the calculator works out the tax accurately.
Understanding employee tax codes
Use the PAYE tax calculator on the HMRC website
Download an example of a completed P11 showing PAYE deductions (PDF 418K)
If you choose this option, you'll need to work out and record the pay and tax information for each pay period in Columns 2 to 8 of the P11 as follows:
To work out the total free pay or total additional pay figure for Column 4a or 4b you can use the Pay Adjustment Tables (Tables A)
To work out the total tax due to date figure for Column 6 you can use the PAYE tax calculator, or either the Calculator Tax Tables or Tables B to D.
You can work out the figure for Column 4a or 4b manually using the Pay Adjustment Tables A. However you may find it more efficient to use the PAYE tax calculator carry out the complete calculation and copy the results to Columns 4a/4b.
To use the tables you need to know:
The weekly and monthly charts in HMRC’s Employer Helpbook E13, 'Day-to-Day Payroll' will help you identify which week or month pay period number you should use.
For all suffix codes and K codes you'll need to use the table for the relevant week or month number, and look up the pay corresponding to the numeric value of the code. You may need to add together entries to arrive at the code number. The tables explain how to do this.
PAYE tax is normally worked out on a cumulative basis. But you may occasionally need to work it out on a non-cumulative basis, known as a week 1/month 1 basis. If you need to use this method, treat each payment separately and ignore any previous payments made to the employee.
If you use a week 1/month 1 basis, you must always use the right table for week 1 or month 1 when you work out the pay adjustment figure. It doesn't matter what the actual week or month number is when you make the payment. There is a tick box on the PAYE tax calculator to enable you to carry out a calculation on a week 1/month 1 basis and copy the results to Columns 4a/4b.
You can read more about week 1/month 1 tax codes in HMRC’s Employer Helpbook E13, 'Day-to-Day Payroll'.
Download the Pay Adjustment Tables (PDF 699K)
Download Employer Helpbook E13, 'Day-to-Day Payroll' (PDF 521K)
You can use Taxable Pay Tables to work out the Column 6 entry - total tax due to date. There are two ways of doing this:
You can use the Calculator Tables together with your calculator to work out the figure for total tax due to date needed for Column 6. For employees with suffix and K codes, you'll also need to know their total taxable pay to date. The way you work this out depends on their tax code.
Using this figure, just follow the instructions in the Calculator Tables booklet to work out the Column 6 figure.
Separate instructions apply if the employee's tax code operates on a week 1/month 1 basis, or if the employee has a tax code BR, D0 or D1.
Download Taxable Pay Tables: Calculator Method (PDF 92K)
If you prefer not to use a calculator, there are alternative manual method tables - Tables B to D - that you can use to work out the employee's tax due.
Download Taxable Pay Tables: Manual Method (PDF 104K)
There are some practical examples showing you how to complete columns 2 to 8 of the P11 in HMRC’s Employer Helpbook E13, 'Day-to-Day Payroll'. The step-by-step guidance covers several different tax codes and tells you what to do in certain special cases.
Download Employer Helpbook E13, 'Day-to-Day Payroll' (PDF 521K)
You may need to follow slightly different procedures when you work out the tax due if:
There are also special procedures for dealing with special types of pay like non-cash alternatives.
Non-standard paydays or moving paydays
PAYE for special types of pay - including non-cash alternatives
Calculating NICs deductions (paper method)
Calculating student loan deductions
Statutory payments - maternity, paternity, adoption, sickness
Download CWG2, 'Employer Further Guide to PAYE and NICs' (PDF 1.4MB)
