TPFB Topic 8 - Payroll

Front

What is HMRC's role in the UK?

Back

Tax authority for payroll

Answer explanation

HMRC, or Her Majesty's Revenue and Customs, is the UK's tax authority responsible for collecting taxes, including payroll taxes. It does not provide health services, regulate education, or manage environmental issues.

Front

What is the purpose of a PAYE reference number?

Back

To be used on all payroll documentation and filings

Answer explanation

The PAYE reference number is essential for identifying an employer's tax obligations and must be included on all payroll documentation and filings, ensuring compliance with tax regulations.

Front

What is net pay?

Back

The amount paid to the employee for a pay period

Answer explanation

Net pay is the amount paid to the employee for a pay period after all deductions, including taxes and other withholdings, have been subtracted from the gross earnings.

Front

What system is used for operating income tax deductions?

Back

PAYE system

Answer explanation

The PAYE (Pay As You Earn) system is used to deduct income tax directly from employees' wages, making it the correct choice for operating income tax deductions.

Front

What must an employer do even if they outsource their payroll?

Back

Register as an employer with HMRC

Answer explanation

Even if an employer outsources payroll, they must register as an employer with HMRC to ensure compliance with tax regulations and responsibilities.

Front

What is the purpose of the Employer Payment Summary (EPS) if no employees were paid?

Back

To file certain claims such as for statutory sick pay

Answer explanation

The Employer Payment Summary (EPS) is used to file claims like statutory sick pay, even if no employees were paid. This ensures that the employer can still report and claim any eligible benefits.

Front

Which of the following is NOT a type of payroll record that must be kept?

• Employee tax code notices
• Employee leave and sickness records
• Personal emails
• Payments to HMRC

Back

Personal emails

Answer explanation

Personal emails are not required payroll records, while employee tax code notices, leave and sickness records, and payments to HMRC are essential for compliance and record-keeping.

Front

What is the purpose of the P45 document?

Back

To enable the new employer to deduct the right amount of tax

Answer explanation

The P45 document is essential for a new employer to accurately deduct the correct amount of tax from an employee's salary, ensuring compliance with tax regulations.

Front

What does the P45 document show about tax?

Back

Tax deducted in the current tax year

Answer explanation

The P45 document shows tax deducted in the current tax year, detailing the amount taken from an employee's earnings. It does not reflect past taxes, future deductions, or refunds.

Front

What document is issued to an employee when they leave a job?

Back

P45

Answer explanation

The P45 is the document issued to an employee when they leave a job. It details their earnings and tax paid, which is important for tax purposes. The other options (P60, P14, P11D) serve different functions.