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Employees need to give you a completed Tax code declaration - IR330. The tax code your employee uses will depend on the work type and their situation.

If your employee does not give you a completed IR330 you need to deduct PAYE at the 45% non-notified rate.

If we notice that one of your employees is using the wrong tax code we'll write to you. This letter will tell you what their code should be. You'll need to start using the correct code and deduct tax based on that code.

Making deductions

When you pay an employee their salary or wages you will need to make deductions for:

These deductions will then need to be paid to us.

If you file your employment information electronically you can offer payroll giving to your employees. You deduct the employee's donation each payday and pass it on to the approved charity.

Child support and protected net earnings

If you’re deducting child support from an employee's pay, the maximum amount of child support you can deduct is 40% of their net earnings (after tax). This is called ‘protected net earnings’. Protected net earnings are usually only affected if you’re paying an employee less than their usual pay, for example, if they take unpaid leave.

Protected net earnings only apply to child support. Other deductions should still be made even if these add up to more than 40% of their pay.

For more protected net earnings information, download the Employer's guide - IR335 below.

If the child support deduction we’ve asked you to make is more than 40% of your employee's net pay, you should only deduct 40% of their net pay amount. We will arrange with your employee to pay the balance, so you do not need to make up the missing amount in future pays.