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 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 in the UK?

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

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.

Front

What is the primary function of the P60 form?

Back

To report annual earnings and tax deductions

Answer explanation

The P60 form is primarily used to report an employee's annual earnings and tax deductions, summarizing the total income and taxes paid during the tax year.

Front

What is the purpose of a P11D form?

Back

To report expenses and benefits provided to employees

Answer explanation

The P11D form is used to report expenses and benefits provided to employees, ensuring that both the employer and employee fulfill their tax obligations accurately.

Front

Which document is used to summarise an employee's total pay and deductions for the year?

Back

P60

Answer explanation

The P60 is the document that summarizes an employee's total pay and deductions for the year, providing a clear overview of earnings and tax contributions.