Tax And Compliance Essentials For Expats Running A Business In The Uk

Launching and running a business in the UK as an expat can be an exhilarating adventure, but it comes with its own set of unique tax and compliance challenges. Understanding these essentials is crucial for ensuring your company’s success and avoiding legal pitfalls.

This guide promises to provide a comprehensive look at the intricate requirements of operating a business as a foreign entrepreneur in the UK.

The legal landscape for expats starting a business involves a myriad of components including selecting an appropriate legal structure, understanding tax obligations, and adhering to employment laws. By delving into this information, expats can make informed decisions that align with both UK regulations and their business objectives.

Legal Structure and Registration

For expats planning to establish a business in the UK, understanding the legal structure and registration process is essential. Different legal structures offer various advantages and responsibilities, and selecting the right one can impact your tax obligations and liability. Registering a business involves a series of steps that require meticulous preparation and compliance with UK regulations.

Legal Structures for Businesses in the UK

The UK offers several legal structures for businesses, each with distinct features that affect liability, taxation, and administrative responsibilities. Choosing the appropriate structure depends on factors such as the size of the business, nature of the operations, and financial goals.

• Sole Trader:This is the simplest structure, ideal for individuals who want to start a small business. The owner is personally responsible for the business debts, and while it’s easy to set up, it doesn’t offer liability protection.
• Partnership:Suitable for businesses owned by two or more people. Profits are shared among partners, and each partner is personally liable for the business debts. There are two types: General Partnership and Limited Partnership.
• Limited Liability Partnership (LLP):Provides limited liability to partners, protecting personal assets from business debts. It’s more complex to set up compared to a general partnership.
• Private Limited Company (Ltd):A separate legal entity offering limited liability to its shareholders. This structure requires more formalities, including annual accounts and corporate tax filings, but offers more credibility to investors.
• Public Limited Company (PLC):A company whose shares are publicly traded. This structure suits larger businesses seeking to raise capital from the public but involves strict regulatory compliance.

Steps to Register a Business as an Expat in the UK

Registering a business in the UK requires careful adherence to regulatory requirements. The process ensures that businesses comply with local laws and maintain proper documentation for tax and legal purposes.

1. Choose your business name and check its availability through the Companies House name availability checker.
2. Select the appropriate legal structure that aligns with your business goals.
3. Prepare the necessary documentation, including proof of identity and address for all involved parties.
4. Register with the Companies House if setting up a limited company. This can be done online or through paper forms.
5. Register for VAT if your turnover exceeds the threshold or if you choose to voluntarily register.
6. Inform HM Revenue and Customs (HMRC) of your business status to manage taxes appropriately.

Necessary Documentation for Business Registration

Proper documentation is critical to the registration process, ensuring compliance with UK business laws. Having these documents prepared in advance will streamline your registration.

Documentation requirements may vary based on the business structure chosen.

• Proof of Identity:Passport or national ID card for all directors, partners, or members.
• Proof of Address:Utility bills or bank statements not older than three months.
• Memorandum and Articles of Association:These documents Artikel the company structure and rules.
• Shareholder Information:Details of shareholders and the distribution of shares.
• Application Forms:Specific forms required by Companies House, such as IN01 for company formation.

Companies House Registration Process

Companies House is the UK’s registrar of companies, responsible for incorporating and dissolving limited companies. The registration process involves submitting necessary information and paying a registration fee.During registration, you’ll need to provide:

• Company Name:Must be unique and not too similar to existing names.
• Registered Office Address:This will be the official company address.
• Director Details:Full name, date of birth, and address of directors.
• Statement of Capital:Information on shares and their distribution.
• Business Activity Code (SIC):Standard Industrial Classification code that describes the business activities.

Once submitted, Companies House typically processes online applications within 24 hours, whereas postal applications may take 8 to 10 days. Upon acceptance, your business will receive a Certificate of Incorporation, signifying its legal existence.

Tax Obligations for Expats

Navigating the tax landscape as an expat running a business in the UK can be challenging due to the unique requirements and obligations involved. Understanding these key tax obligations is crucial for compliance and efficient tax planning. This section will delve into the specifics of registering for a Unique Taxpayer Reference (UTR), the deadlines for submitting tax returns, and the differences between self-assessment tax and corporation tax.

Unique Taxpayer Reference (UTR) Registration Process

Expats operating a business in the UK must obtain a Unique Taxpayer Reference (UTR), a 10-digit number that identifies their tax account. The UTR is essential for tax-related activities, including filing returns and paying taxes.

• Registration Process:To acquire a UTR, you must register as self-employed or register your business with HM Revenue and Customs (HMRC). This can be done online through the HMRC website. Ensure you have all necessary documents, such as proof of identity and business details, ready for a smooth registration process.

• Time Frame:Typically, it takes up to 10 working days to receive the UTR after registration. Expats should register promptly to avoid delays in tax compliance.

Deadlines for Submitting Tax Returns

Meeting tax return deadlines is crucial for expats to avoid penalties and ensure compliance. The deadlines vary based on the type of tax being filed.

• Self-Assessment Tax Returns:For income earned in the previous tax year, the deadline for online submissions is January 31st, while paper returns are due by October 31st.
• Corporation Tax Returns:Companies must file their returns 12 months after the end of the accounting period they cover. The payment of corporation tax is due nine months and one day after the end of the accounting period.

Self-Assessment Tax vs. Corporation Tax

Choosing between self-assessment tax and corporation tax depends on the business structure and can significantly impact the tax liability of expats.

Feature	Self-Assessment Tax	Corporation Tax
Applicability	Individuals and sole traders report personal income and business profits.	Limited companies and certain organizations on their taxable profits.
Tax Rates	Progressive rates from 20% to 45%, depending on income level.	Flat rate of 19% on profits (as of 2023).
Complexity	Simpler for individuals; less paperwork.	More complex; requires comprehensive financial statements.

“Choosing the right tax structure can optimize tax efficiency and ensure compliance with UK tax regulations.”

Value Added Tax (VAT)

Value Added Tax (VAT) is a crucial aspect for businesses operating in the UK, especially for expats running their enterprises. Understanding the criteria for registration, available schemes, and the process for completing VAT returns is key to maintaining compliance.

Criteria for VAT Registration in the UK

Businesses in the UK must register for VAT if their taxable turnover exceeds a certain threshold. As of the latest guidance, this threshold is £85,000 in a 12-month period. It’s essential for businesses to track their turnover closely to determine when they must register.

• Businesses with a taxable turnover below the threshold can still register voluntarily, which can be beneficial for reclaiming VAT on business expenses.
• VAT registration is mandatory for businesses that expect to exceed the threshold within the next 30 days.

Different VAT Schemes Available for Businesses

The UK offers several VAT schemes tailored to different business needs, providing flexibility in how VAT is accounted for and reported. Understanding these can help businesses manage cash flow effectively.

• Standard VAT Accounting:This is the default scheme where businesses pay VAT on their sales and reclaim VAT on purchases.
• Flat Rate Scheme:Simplifies VAT accounting by allowing businesses to pay a fixed rate of VAT to HMRC and keep the difference between what they charge their customers and pay to HMRC.
• Cash Accounting Scheme:Businesses only pay VAT when they receive payments and reclaim VAT when they pay their suppliers.
• Annual Accounting Scheme:Allows businesses to make advance VAT payments throughout the year based on estimates, with a final reconciliation at the end of the year.

Process of Completing and Submitting a VAT Return

Completing a VAT return requires careful documentation and reporting of all transactions subject to VAT. The return must be submitted to HMRC, typically every quarter.

• Ensure all VAT invoices are correctly recorded and available for review.
• Calculate the total VAT due on sales and the total VAT reclaimable on purchases.
• Submit the return online using the government gateway or through compatible accounting software.
• Make the necessary payment to HMRC by the deadline to avoid penalties.

Calculating VAT Using a Simple Example

Understanding how to calculate VAT is essential for accurate reporting. Below is a table illustrating a basic example of VAT calculation for a product sold at £100 with a VAT rate of 20%.

Item Description	Net Price	VAT Rate	VAT Amount	Total Price
Product A	£100	20%	£20	£120

VAT Amount = Net Price x VAT Rate

This straightforward example demonstrates how to calculate the VAT amount, which is then added to the net price to determine the total price to charge customers.

Employment and Payroll Regulations

Navigating employment and payroll regulations in the UK can be complex, especially for expat business owners. It’s essential to understand these regulations to ensure compliance and avoid potential penalties. This section provides crucial insights into hiring employees, managing payroll taxes, setting up a PAYE system, and understanding National Insurance contributions.As an expat running a business in the UK, understanding employment regulations is essential for successful business operations and compliance.

It involves hiring employees, managing payroll systems, and understanding tax obligations related to employment. Here is a detailed guide on these critical aspects.

Guidance on Hiring Employees

Hiring employees requires compliance with various legal obligations in the UK. It’s crucial for expat business owners to understand these requirements to ensure smooth operations.Before hiring employees, ensure you have the right to work checks in place to verify each employee’s eligibility to work in the UK.

It’s a legal obligation to keep a record of these checks.

• Draft contracts that comply with UK employment law.
• Understand the minimum wage requirements to ensure fair compensation.
• Provide a detailed job description outlining roles and responsibilities.
• Consider workplace diversity and anti-discrimination laws during the hiring process.

Employer Obligations Concerning Payroll Taxes

As an employer, you’re responsible for deducting and paying income tax and National Insurance contributions from your employees’ wages. This section Artikels the key obligations you need to fulfill.It’s vital to accurately calculate payroll taxes to avoid penalties. Regular updates and audits ensure compliance.

1. Register as an employer with HM Revenue and Customs (HMRC).
2. Calculate and deduct Income Tax and National Insurance from employees’ pay using the PAYE system.
3. Submit payroll information to HMRC, typically each time you pay your employees.
4. Maintain accurate records of payroll taxes for at least 3 years.

Setting up a PAYE System for Employees

PAYE, or Pay As You Earn, is the system employers use to collect Income Tax and National Insurance from employees’ wages. Setting up PAYE requires specific steps to ensure compliance.The PAYE system allows automatic deduction of taxes, simplifying tax management for employers.

1. Register for PAYE with HMRC before the first payday.
2. Get a payroll software that can report to HMRC in real-time.
3. Calculate your employees’ wages and tax deductions accurately.
4. Submit a Full Payment Submission (FPS) to HMRC each time you run payroll.

National Insurance Contributions Rules

National Insurance (NI) contributions are mandatory deductions from earnings to fund state benefits. Employers have specific responsibilities concerning NI contributions.Understanding NI contributions ensures employees receive entitlements such as the state pension and contributes to overall national welfare.

• Employers pay Class 1 National Insurance contributions on employees’ earnings above a certain threshold.
• Monitor changes in NI thresholds and rates annually to ensure compliance.
• Ensure contributions are made promptly to avoid interest or penalties.
• Provide employees with regular pay slips showing their contributions.

Accounting and Record Keeping

For expats running a business in the UK, understanding the nuances of accounting and record keeping is crucial. Accurate financial records are the backbone of any successful business, ensuring compliance with legal obligations and aiding in strategic decision-making. Proper accounting not only helps in monitoring the financial health of the company but also plays a critical role in tax preparation and audits.Maintaining precise financial records provides a clear picture of your business’s financial position.

It assists in tracking income, expenses, cash flow, and profitability, enabling you to make informed decisions. Moreover, accurate record keeping is crucial for meeting tax obligations and legal requirements, reducing the risk of penalties.

Accounting Systems for UK Businesses

UK businesses have access to various accounting systems that cater to different needs. Selecting the right system is vital for efficient financial management.

• Cash Accounting:Suitable for smaller businesses, cash accounting records income and expenses when they are actually received or paid. This system offers simplicity and immediate tracking of cash flow.
• Accrual Accounting:This system records income and expenses when they are incurred, regardless of when the cash is received or paid. It provides a more accurate financial picture and is required for larger businesses.
• Cloud-Based Accounting Software:Modern businesses often utilize cloud-based solutions like Xero, QuickBooks, or Sage. These platforms offer real-time data access, automatic updates, and integration with other business tools.

Tips for Effective Record-Keeping

Good record-keeping practices not only ensure compliance but also enhance business operations and planning.

“Regularly update your records and categorize transactions to simplify tax filing and financial analysis.”

Implement a system for organizing and storing receipts and invoices. Use digital tools to scan and save important documents, reducing clutter and increasing accessibility. Establish a routine, such as monthly reviews, to ensure records are consistently maintained.

Legal Requirements for Retaining Financial Documents

UK law mandates specific requirements for retaining financial documents, vital for audits and compliance purposes.Businesses must retain financial records for a minimum of six years from the end of the last company financial year they relate to. This includes:

• All receipts, invoices, and expense records.
• Bank statements and correspondence relating to finances.
• Details of all goods and services bought and sold.

Failure to retain proper records can lead to fines and challenges during audits. Therefore, it is essential to establish robust record-keeping practices from the outset to ensure legal compliance and facilitate business growth.

Compliance with Data Protection Laws

Understanding and adhering to data protection laws is essential for any business operating in the UK. The UK General Data Protection Regulation (UK GDPR) sets the framework for data protection, ensuring the privacy and security of personal data. Businesses, especially those run by expats in the UK, need to align their operations with these laws to avoid legal repercussions and build trust with their customers.The UK GDPR emphasizes transparency, accountability, and data security.

It mandates businesses to safeguard personal data, process it lawfully, and ensure individuals’ rights are respected. Compliance is not just a legal requirement but also a strategic necessity for maintaining customer confidence and competitive advantage.

Key Principles of the UK GDPR

The UK GDPR Artikels several key principles that businesses must follow to ensure data protection compliance. These principles guide how personal data should be collected and handled.

• Lawfulness, Fairness, and Transparency:Data must be processed lawfully, fairly, and in a transparent manner in relation to individuals.
• Purpose Limitation:Data should be collected for specified, explicit, and legitimate purposes and not further processed in a manner that is incompatible with those purposes.
• Data Minimization:Only data that is necessary for the purposes should be collected and processed.
• Accuracy:Data must be accurate and kept up to date.
• Storage Limitation:Personal data should not be kept for longer than necessary.
• Integrity and Confidentiality:Data must be processed securely to protect against unauthorized or unlawful processing, loss, destruction, or damage.
• Accountability:The data controller is responsible for, and must be able to demonstrate, compliance with the above principles.

Measures to Ensure Data Protection Compliance

To ensure compliance with data protection laws, businesses can implement various measures. These measures help in safeguarding the data and ensuring that the organization adheres to the legal requirements effectively.

• Conducting Data Protection Impact Assessments (DPIAs):These assessments help in identifying and mitigating risks associated with data processing activities.
• Regular Training and Awareness Programs:Educating staff about data protection laws and best practices increases organizational compliance.
• Implementing Strong Data Security Measures:This includes using encryption, access controls, and secure data storage solutions to protect data from breaches.
• Maintaining Comprehensive Records:Documenting data processing activities ensures transparency and accountability.
• Establishing Clear Data Handling Policies:These policies provide guidance on how data should be collected, processed, and stored.

Role of a Data Protection Officer

In the context of UK GDPR compliance, appointing a Data Protection Officer (DPO) can be crucial for businesses. The DPO plays a significant role in overseeing data protection strategies and ensuring adherence to regulatory requirements.The DPO is responsible for informing and advising the organization on data protection obligations, monitoring compliance, and providing guidance on data protection impact assessments.

They also serve as a point of contact for data subjects and the Information Commissioner’s Office (ICO).

Assessing Data Protection Risks

Regularly assessing data protection risks is an essential practice for businesses to mitigate potential threats and vulnerabilities. This involves identifying data processing activities, evaluating the risks, and implementing controls to address them.For example, an online retail business processing customer payment information should assess the risk of data breaches.

By identifying potential threats such as hacking or unauthorized access, the business can implement additional security measures like two-factor authentication and strict access controls to mitigate these risks.

“Identifying potential threats and addressing them promptly ensures both compliance and the protection of sensitive data.”

Intellectual Property Protection

Intellectual property (IP) protection is a critical consideration for expats running businesses in the UK. Safeguarding your creations not only secures your competitive edge but also enhances the value of your business. The IP framework in the UK provides robust mechanisms to protect various types of intellectual assets, ensuring that your innovations are legally shielded against unauthorized use.

Types of Intellectual Property That Can Be Protected in the UK

In the UK, several types of intellectual property can be protected, each catering to different forms of innovation and creativity. Understanding these categories helps businesses ensure comprehensive protection of their assets.

• Trademarks:Protect brands, names, and logos used on products or services.
• Patents:Protect inventions and processes that offer new solutions or improvements.
• Design Rights:Protect the shape, configuration, or decoration of products.
• Copyright:Protect original works of authorship, such as literature, music, and software.

Process for Registering a Trademark

Registering a trademark in the UK is a structured process that offers exclusive rights to use specific symbols or words. This ensures that your brand identity is uniquely yours and legally enforceable.

1. Conduct a Trademark Search:Ensure your trademark is unique and not already registered.
2. Choose Your Trademark:Select words, logos, or symbols that represent your brand.
3. Application Submission:Submit an application to the UK Intellectual Property Office (UKIPO).
4. Examination Process:UKIPO examines the application for compliance with legal requirements.
5. Publication and Opposition:The trademark is published in the Trade Marks Journal, allowing for objections.
6. Registration:If no opposition is raised, the trademark is registered, granting protection for 10 years.

Advantages of Protecting Intellectual Property for Expats

Protecting intellectual property offers numerous benefits that are particularly valuable for expats operating in a competitive environment like the UK. These advantages extend from market differentiation to financial stability.

• Exclusivity:Ensures exclusive rights to use and exploit innovations, creating a competitive advantage.
• Brand Recognition:Strengthens brand identity and enhances consumer trust and loyalty.
• Monetary Benefits:Enables licensing opportunities and can attract investors by showcasing a strong IP portfolio.
• Legal Protection:Provides a legal framework to act against infringement, ensuring your rights are upheld.

Common Intellectual Property Violations

Understanding common IP violations helps in recognizing and preventing unauthorized use of your intellectual assets. The following table illustrates typical violations, aiding expats in maintaining vigilance.

Type of Violation	Description	Example
Trademark Infringement	Unauthorized use of a registered trademark.	Using a similar logo that confuses consumers.
Patent Infringement	Using a patented invention without permission.	Manufacturing a patented product without a license.
Copyright Infringement	Reproducing or distributing copyrighted material without permission.	Copying software code or music illegally.
Design Right Violation	Copying the design of a protected product.	Producing counterfeit designer goods.

“Intellectual Property is the oil of the 21st century.”

By diligently protecting your intellectual property, you safeguard your business’s innovative edge, ensuring its sustainable growth in the vibrant UK market.

International Trade Considerations

Navigating the complexities of international trade is crucial for expats running businesses in the UK. Understanding the regulatory landscape can significantly impact your business operations and profitability. This section will provide an in-depth exploration of key elements such as the requirements for exporting goods, the effects of Brexit, customs duties, import taxes, and strategies for managing international shipments efficiently.

Requirements for Exporting Goods from the UK

Exporting goods from the UK involves complying with several regulations and obtaining necessary certifications. Businesses must be well-prepared to address these requirements to avoid any legal or financial setbacks.

• Register for an EORI (Economic Operator Registration and Identification) number, which is essential for customs declarations.
• Classify your goods correctly using the UK Trade Tariff tool to determine applicable duties and taxes.
• Comply with any product-specific regulations and obtain certifications, such as CE marking for goods sold in the EU.
• Prepare commercial invoices and other shipping documents accurately to avoid delays at the border.

Impact of Brexit on International Trade for Expats

Brexit has significantly altered trade dynamics between the UK and the EU, affecting tariffs, regulations, and market access. These changes have particularly relevant implications for expats conducting business.

• Trade agreements with the EU now involve customs checks and additional documentation, increasing transit times and costs.
• Businesses face new VAT rules for selling goods to EU customers, necessitating compliance with both UK and EU VAT regulations.
• Potential changes in product standards and regulations require businesses to adapt to different compliance requirements.
• Ensure awareness of rules of origin requirements impacting tariffs and market access for certain goods.

Customs Duties and Import Taxes Overview

Customs duties and import taxes can significantly affect the cost structure of a business. Understanding these financial obligations is essential for accurate pricing and budgeting.

Customs duties are determined by the product’s classification and origin, as per the UK Global Tariff.

• Import VAT is payable on goods entering the UK, calculated based on the item’s value, including duty, freight, and insurance costs.
• Utilize duty deferment accounts to delay payment of customs duties and VAT, improving cash flow management.
• Consider customs brokerage services to ensure compliance and streamline the import process.

Strategies for Managing International Shipments Effectively

Efficient management of international shipments can reduce costs and improve customer satisfaction. Here are strategies to enhance your international trade operations:

• Establish strong relationships with reliable logistics providers and negotiate favorable shipping rates.
• Utilize technology for real-time tracking and management of shipments, ensuring transparency and efficiency in the supply chain.
• Consider warehousing solutions in key markets to reduce delivery times and optimize inventory management.
• Stay informed about trade agreements and tariff changes to leverage cost-saving opportunities and minimize risks.

Business Insurance Needs

In the UK, business insurance is a critical component for companies, including those operated by expats. It provides financial protection against various risks that can impact the stability and continuity of a business. Understanding the types of insurance required and their benefits helps in safeguarding a business from unforeseen circumstances.

This ensures not only compliance with legal requirements but also enhances the reputation and financial security of the business.Insurance policies vary based on the nature of the business, its size, and the risks involved. Some insurance types are mandatory, while others are highly recommended to protect against specific risks.

Below is an exploration of essential insurance coverages for businesses operating in the UK, especially pertinent for expatriate business owners.

Types of Insurance Necessary for Businesses in the UK

Businesses in the UK should consider multiple insurance policies to mitigate various risks. The essential types of insurance include:

• Public Liability Insurance:Covers legal costs and compensation payments if a third party is injured or their property is damaged because of your business activities.
• Employers’ Liability Insurance:Mandatory for most businesses, it protects against claims from employees who suffer job-related illnesses or injuries.
• Professional Indemnity Insurance:Protects businesses against claims of negligence or mistakes in professional services provided.
• Property Insurance:Covers damages to business premises and contents due to fire, theft, or other disasters.
• Business Interruption Insurance:Provides financial support if the business is unable to operate due to unforeseen events such as natural disasters.

Benefits of Having Public Liability Insurance

Public liability insurance is crucial for businesses that interact with the public. It offers significant benefits, including:

• Protection against legal action from third parties due to accidents or injuries occurring on the business premises.
• Coverage of legal fees and compensation claims, reducing financial strain on the business.
• Enhancement of business credibility, as clients often expect businesses to have this insurance.

This insurance is especially beneficial for retail businesses, event organizers, and service providers who frequently come into contact with the general public.

Mandatory Insurance Policies for Expats

Certain insurance policies are legally required for all businesses in the UK, including those run by expats. These include:

• Employers’ Liability Insurance:Compulsory if you employ one or more workers, with a minimum cover of £5 million.
• Motor Insurance:Mandatory for businesses using vehicles for their operations, covering third-party injuries and damages.

Compliance with these requirements avoids legal penalties and ensures business operations align with UK’s legal standards.

Risks Covered Under Business Interruption Insurance

Business interruption insurance is designed to cover the loss of income a business suffers after a disaster. It includes:

• Coverage for loss of profits due to disruptions like fire, storm damage, or other unforeseen events.
• Expenses incurred while operating in a temporary location during the restoration of the original premises.
• Protection against supply chain disruptions affecting business operations.

For example, if a flood damages a retail store, this insurance can help cover lost sales during the closure and any additional expenses incurred to reopen the business efficiently.

Last Recap

The journey of navigating tax and compliance essentials for expats running a business in the UK is fraught with complexities but is ultimately rewarding. By understanding your legal obligations and taking proactive steps to ensure compliance, you can focus on growing your business with confidence.

As you’ve seen, from legal structures to insurance needs, every aspect is crucial to your venture’s success.

Furthermore, being well-informed about protecting intellectual property and adapting to international trade considerations can safeguard your business against unforeseen challenges. Embrace this knowledge as a powerful tool to thrive in the dynamic and competitive UK market.

Detailed FAQs

What legal structures are available for expats starting a business in the UK?

Expats can choose from several legal structures, including sole trader, partnership, limited company, and limited liability partnership, each with its own regulatory and tax implications.

How do expats register for a Unique Taxpayer Reference (UTR) in the UK?

To register for a UTR, expats must first set up a UK address for tax purposes and then apply through HM Revenue and Customs, either online or via post.

What are the key deadlines for tax returns in the UK?

Self-assessment tax returns are due by January 31st each year, while corporation tax returns must be filed within 12 months of the end of the accounting period.

Are expats required to register for VAT in the UK?

Expats must register for VAT if their taxable turnover exceeds the threshold set by HMRC, which is regularly updated.

What are expats’ obligations concerning payroll taxes in the UK?

Expats must operate a PAYE system, ensuring the correct amount of income tax and National Insurance contributions are deducted from employees’ wages.