Employment tax

Reward, retain and stay compliant

Employment tax rules covering PAYE, benefits in kind and expenses shift constantly and it can be costly to get them wrong if HMRC challenges your processes. Add in payroll obligations and reporting requirements that change year on year and it’s easy to see why employment tax can feel like a moving target.

That’s where our employer solutions team can help. Whatever’s driving your query, be that tightening up compliance, expanding your team overseas, or building a reward package that retains people, we shape our advice around your specific situation.

Our employer solutions experts can provide support on several issues that your business may be facing:

Our employer solutions team focus on your business needs and challenges and provide practical, pragmatic and realistic solutions for you and your employees. Getting professional advice and support on the issues above can help reduce risk.

 

Tailored employer solutions to support your needs

For your employees to perform to the best of their ability and contribute significantly to your success, it’s vital that they feel incentivised and engaged. And to grow and succeed, it’s also essential you attract and retain the top talent, whilst managing risk and driving growth.

Payroll colleagues chatting at work

Off-payroll working and IR35

With HMRC increasing scrutiny of the sector (see our piece on CIS fraud and the supply-chain clampdown), it matters more than ever to do this correctly. We help contractors and subcontractors alike manage their CIS obligations and avoid costly errors. There could be real financial risk for both engager and contractor if you make an error when determining whether a contractor falls inside or outside IR35. We help you assess employment status correctly, put the right processes in place and manage your obligations under the off-payroll working rules.

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Two workmen on a construction site looking down, attempting to resolve an issue.

Construction industry scheme (CIS)

If you engage contractors or subcontractors in construction, CIS deduction rules bring their own compliance burden, and verification, deduction rates and monthly returns all need to be right.

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Woman pouring over paperwork

Global mobility

If you send employees overseas, or bring workers into the UK from abroad, it raises tax and social security questions in more than one jurisdiction at once. We help you navigate the implications for both the business and the person, so nothing gets missed.

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Employee team behind counter in cafe.

Employee share plans

Giving employees a stake in the business is one of the most effective ways to reward, motivate and retain them, and structured well, it can be highly tax efficient too. We help you choose the right type of employee share plan, from EMI and CSOP to unapproved arrangements and manage the tax, valuation and compliance side of setting it up.

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Employer solutions: how we work

  • We start with a conversation We understand that every business' employer risks look different, so we begin by understanding your specific setup: your workforce, how you reward them and where you feel compliance pressure.

  • We identify where the real risk sits Whether that's IR35 status decisions, CIS deductions, PAYE reporting, or cross-border tax exposure, we pinpoint the areas of your business most likely to attract HMRC attention.

  • We build a plan Fixing risk and improving how you reward and retain people often go hand in hand. We look for solutions that do both, rather than treating compliance and reward strategy as separate problems.

  • We stay involved as things change Employment tax rules often change; off-payroll working, national minimum wage, benefit reporting have all evolved in recent years. We keep you ahead of changes that affect your business.

Useful downloads

Employee benefits

A practical reference guide to how common employee benefits are taxed, covering company cars, loans, medical insurance, trivial benefits, non-taxable benefits and HMRC’s benchmark expense rates.

Download

PAYE health check

An overview of PKF’s PAYE health check service; how we review your payroll processes and records to identify compliance gaps and overpayment/underpayment risk before HMRC does.

Download

Pension salary exchange

How pension salary exchange works, including a worked example of the national insurance savings for both employer and employee.

Download

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Meet the employer solutions team

Get employment tax and employer solutions support

Get advice on employment tax, reward packages, benefit reporting, HMRC enquiries and more – with consideration of cost savings and risk control for your business.

FAQs about employment tax

What is employment tax?

Employment tax covers the taxes and reporting obligations that apply to paying and employing people, including PAYE, Class 1 and Class 1A national insurance contributions and the tax treatment of benefits in kind and expenses. It also covers areas like termination payments, where specific rules determine how much of a payment can be made tax-free. It’s crucial to get employment tax right as HMRC can challenge incorrect treatment, which could lead to unexpected liabilities for your business.

What are employer responsibilities?

From a tax perspective, employers are responsible for operating PAYE correctly, deducting the right tax and national insurance from employees’ pay, reporting benefits and expenses (via P11D or a PSA), and complying with national minimum wage rules.

Depending on your circumstances, this can extend to CIS deductions for construction subcontractors, correctly assessing contractor status under IR35, and managing tax obligations for employees working overseas. If you make any mistakes, you run the risk of HMRC penalties, interest and additional compliance costs.

What is IR35?

IR35 is UK tax legislation designed to identify contractors who are working like employees but supplying their services through an intermediary such as a personal service company (PSC), often to reduce tax and national insurance. Where IR35 applies, the contractor is taxed broadly as an employee for that engagement.

Since April 2021, medium and large private-sector businesses (not the contractor) are usually responsible for determining a contractor’s employment status, which makes it a compliance risk for engagers as well as contractors.

Do I need to register for CIS?

If you’re a contractor paying subcontractors for construction work, you must register for the construction industry scheme (CIS) with HMRC before making any payments. This applies even if construction isn’t your main trade, as long as your spend on construction operations exceeds certain thresholds.

Subcontractors don’t have to register, but if they don’t, contractors must deduct tax at a higher rate (30% rather than 20%) from their payments. So, registration is usually in a subcontractor’s interest too.

What counts as global mobility tax?

Global mobility tax covers the tax and social security implications of employees working across borders. That could be UK staff being sent to work overseas, or overseas workers coming to the UK. It normally includes questions like:

  • Where the employee should be taxed
  • Whether they remain liable to UK national insurance or an overseas equivalent
  • Any double taxation relief available
  • Payroll obligations in each country involved

If you get this wrong, it can create liabilities in more than one jurisdiction at once, for both the employer and the employee.

When does mandatory payrolling of benefits in kind start?

Mandatory payrolling of benefits in kind comes into force from April 2027. Businesses that haven’t started preparing their systems and processes are likely to find the transition harder than those who get ahead of it early.

Last Reviewed: September 2026