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Under PAYE, income from employment is subject to deductions of income tax and NIC in addition to other deductions. Income from employment includes salary, basic pay, overtime, bonus payments, shift payments, regional payments such as London weighting, tips and gratuities plus some expenses, unless they are business expenses. This list is not exhaustive. Also included as income is any incidental benefit of any kind obtained by the employee if it is money or money’s worth, or if the employer has registered for the voluntary payrolling of expenses and benefits. See the How might non-cash income and benefits be taxed? and Voluntary payrolling of benefits in kind guidance notes.

The total of the individual items of pay that make up employment income is normally called ‘gross pay’.

See Example 1.

Benefits in kind (BIK) are usually dealt with under the benefits code and, unless payrolled, are reported at year-end under the P11D procedures. See the Voluntary payrolling of benefits in kind and Year-end benefit reporting guidance notes.