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We are currently updating our website for the 2024/25 tax year. Please bear with us for a short while as we do this. 

Note: From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages reduced from 12% to 10%. From 6 April 2024, that rate is reduced further to 8%, the main rate of self-employed class 4 NIC is reduced from 9% to 6% and class 2 NIC is no longer due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. We will include these changes with our updates in the next few weeks.

Updated on 6 April 2024

Payroll calculations and submissions: paper filers

This page tells paper filers how to calculate and record the right deductions from their employee's pay. If you are an online filer, your payroll software will do the calculations for you.

person typing on a calculator whilst holding a pencil
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Content on this page:

Recording pay details

As a consequence of taking on your new employee, you should have already set up a form RT11 deductions working sheet for them. Please remember that an RT11 is just a tool for you to use to help you run your payroll. It does not need to be sent in to HMRC at any stage, however you will need to keep it somewhere safe, as the data on it will form part of your payroll records.

On each pay day the following details, along with some others, must be recorded carefully in the RT11:

  • Amount of pay: details of what counts as pay are given in our section how the Pay As You Earn system works. Broadly it covers all cash payments, wages, salary, overtime payments and bonuses.
  • Tax deducted – see below
  • Employers National Insurance contributions – see below
  • Employees National Insurance contributions – see below
  • Any student loan deductions – see below

HMRC should send you all the forms and guidance you need to run your payroll, including RT11 – they are not available on GOV.UK. Otherwise, they are available from the employer orderline to those employers who HMRC have agreed can use paper forms.

Working out tax, NIC and student loans

Each pay day you will need to work out the correct deductions to make from your employee’s pay. You can use HMRC's ‘tables’, which you can get by following the links below, to calculate the tax and other deductions:

  • National Insurance contributions Tables: note that for most people aged 21 or over and under state pension age, you will use category A, and for those under 21 you will use category M
  • Tax Pay Adjustment Tables: these are used to work out how much tax free pay the employee should get in that pay period – an example of how these work is below.
  • Taxable Pay Tables: these are used to work out the marginal tax rates to apply to the balance – an example of how these work is below.
  • SL3 Student Loan Deduction Tables: you go to the table which corresponds to your employee’s plan type and look up the amount of weekly or monthly earnings in the left hand column to find the corresponding student loan deduction in the right hand column. If the exact amount of earnings is not shown, look for the nearest figure below and use the amount of student loan deduction shown for that range of earnings.

Our payroll calendar can help you with your calculations. You will need to know in which tax period your employees pay date falls so that you can manually calculate their tax deductions.

Example

Please note that we do not consider National Insurance or other deductions in this example.

Jane pays her weekly paid employee, Jude, on Friday 7 June 2024 – looking at our payroll calendar, Jane can easily identify that this is in week 9.

Using HMRC’s tax tables and Jude’s tax code (which is 1257L), Jane can see that Jude is entitled to £2,177.28 tax free pay to date.

This is worked out as follows:

  • Divide the code (1257) into units of 500 and note the number of units and the amount left over – for example, for code 1257 the number of units of 500 is 2 and the remainder is 257.
  • Look up the amount of pay adjustment from the main look-up table for week 9, for the remainder (257 in this example). This is £446.40.
  • Multiply the figure given in the box marked ‘*’ at the bottom of the week 9 page (£865.44) by the number of units of 500.
  • Add these two amounts together. Thus, for code 1257 at week 9, the tax-free pay is £2,177.28 (£865.44 x 2 plus £446.40).

Jane’s payment to Jude on 7 June 2024 brings Jude’s total pay to date to £2,000.00 – as such, there is no need for Jane to withhold any income tax from Jude’s pay on that date, as the total amount of Jude’s earnings are less than the tax-free pay amount.

However if Jude’s pay, as at 7 June, was £2,300 in total, then her total taxable pay would be £122.72 (£2,300 minus £2,177.28). This means Jude has to pay tax on £122.72 of her earnings.

By using the Taxable Pay Tables for 2024/25, Jane would be able to work out that Jude’s tax is £24.40, as follows:

  • She uses Table B on pages 6 and 7 (the instructions tell you to use this if your employee is an English, weekly paid, basic rate taxpayer (as Jude is)).
  • The nearest round figure below £122.72 is £100. The tax due on £100, per Table B is £20.
  • Then Jane uses Table B for the remainder of £22 (you ignore the pence). That’s £4.40.
  • In total Jude’s tax is £24.40.

Assuming Jude had not paid any tax in the previous weeks then £24.40 would be deducted from her pay on 7 June. But if she had already paid a total of say £18 in previous weeks, then you would need to deduct £6.40 (being £24.40 - £18) on 7 June. 

If you do not have internet or printer access you can order paper copies of the tables from HMRC's employer orderline.

We have only given a brief outline here of the first steps to take. More detailed information is provided by HMRC in guide RT7 – Guidance for employers exempt from filing Real Time Information online.

  Tip: a quick and easy way to work out the tax and NIC deductions as an alternative to using the tables (or to just double check your workings from the tables) is to use the standalone calculators on GOV.UK.

The calculators will work out the amounts for you and will give you the figures that you need to enter into the various columns of the RT11. These do not need to be downloaded from the GOV.UK website.

Once you have worked out how much you need to deduct from your employees pay, you have to pay your employee the ‘net’ amount and give them a payslip.

Sending the information to HMRC

The reporting of the actual payments and deductions to HMRC will happen once a quarter on form RT2.

You must remember to pay HMRC the correct amounts of tax, National Insurance and student loan deductions. See our page on paying HMRC for more information.

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