In the U.K., almost all employers send income tax and National Insurance contributions for their employees to HM Revenue and Customs (HMRC). They do this through the Pay As You Earn (PAYE) system. For growing small and medium-sized businesses (SMBs), keeping all of this information up to date can be time-consuming. Moss helps centralise spend workflows—corporate card transactions, reimbursements, and accounts payable, so finance teams can review, approve, and export spend data consistently.
Let’s dive into what HMRC PAYE is and the role it plays for both employers and employees. We’ll also explore the ways Moss helps teams keep employee spend organised—by capturing transaction details, collecting receipts, and assigning accounting attributes—so payroll and finance teams have consistent records to work from.
What does HMRC PAYE mean, and how does it work?
PAYE is the system through which most UK employees pay their income tax and National Insurance. Under PAYE, employers deduct Income Tax and National Insurance through payroll and pay HMRC according to PAYE payment deadlines. For many employees, this reduces the likelihood of a large end-of-year bill, though tax can still be adjusted if codes or circumstances change.
PAYE also covers certain employee perks, known as Benefits in Kind (BIKs). These add-ons include wellness budgets, training allowances, and company-provided equipment. Taxable benefits and expenses may be taxed through payroll (‘payrolling’) or reported after the tax year, depending on how the employer reports them and the benefit type..
If any payment details are scattered or recorded inconsistently, it can cause problems like incorrect pay and missed tax payments. Using a spend platform like Moss to standardise how employee spend is captured, reviewed, and exported can reduce manual follow-ups when payroll teams need supporting information.
HMRC PAYE for employees
For employees, PAYE runs in the background. The company applies the correct tax code, calculates deductions, and issues pay. At the end of the tax year, employees receive a summary of their total earnings and withholdings called a P60. Those who receive taxable BIKs also get a P11D. Employers use these forms to report perks to HMRC so the employee’s total taxable income is accurate.
In this process, employees are mainly responsible for checking their tax codes, reviewing payslips, and understanding how benefits affect taxable income. They also must keep personal information up to date to ensure payroll calculations stay accurate.
HMRC PAYE for employers
Employers don’t just handle the administration side of PAYE — they also maintain accurate records to keep payroll data reliable. Many employers review additional allowances during regular payroll checks. For example, teams may verify eligibility for the HMRC employment allowance↗ or compare dining costs against HMRC meal allowance rates↗.
Taxable benefits add extra steps. Employers can process these through payroll or report them later, but either way, they must record the details accurately. Teams that understand their HMRC payroll duties often make fewer errors and spend less time on month-end and year-end reporting.
PAYE and BIKs
A BIK is any non-cash perk an employee receives that provides personal value. Some benefits are taxable, and employers must report them, either through payroll (‘payrolling’) or via end-of-year forms, depending on the benefit and the employer’s approach. Common examples include gym memberships, professional training budgets, and wellness stipends.
Employers may encounter problems if they record benefits inconsistently. A wellness payment, for instance, might go through a prepaid card one month, a reimbursement the next, and an invoice payment later. When labels and records differ, payroll teams spend extra time combining scattered details.
Keeping all benefit-related costs in a single system with clear descriptions simplifies the entire payroll process. It helps employers calculate taxes accurately, reducing the risk of compliance issues with HMRC.
How Moss helps capture and organise employee spend
Moss supports corporate cards↗ and provides workflows to review transactions, collect receipts, and export spend data, helping teams keep records consistent for downstream processes.
Teams can review spend and assign accounting attributes (for example cost centres / GL-related fields, depending on configuration), which helps keep exported spend data consistent.
Once organised, Moss records the data in a structured format and lets teams export spend data (for example, via dedicated Export pages for card transactions and reimbursements) and keep accounting-facing data organised. With it, finance teams can save time, reduce errors, and stay compliant with HMRC.
PAYE reporting and compliance best practices
Taking a steady approach to PAYE reduces manual rework and keeps payroll reliable. Follow these best practices to stay organised and accurate:
Adjust spending and categorise BIKs: Update budgets↗ when rules change and clearly label BIKs so they don’t blend into other costs.
Review benefit activity regularly: Track benefits throughout the year instead of waiting for the tax year to close to stay on top of reporting.
Automate benefit tracking: Use a system that captures transaction details automatically to reduce manual sorting and maintain accuracy.
Common PAYE and BIK reporting mistakes
Mistakes can happen when teams overlook small benefits and irregular allowances. For example, a one-time stipend processed without the right description can force finance teams to search multiple sources during payroll.
Mixing business and personal costs is another common issue, particularly with reimbursements. Moss reduces this problem by offering straightforward workflows and approval steps that keep spending correctly classified.
Some teams also miss allowance types, such as meal and travel expenses. Finance managers often consult external guidance to confirm which costs qualify and review these categories during internal audits. Taking this proactive approach prevents errors and minimises the need for corrections later.
Streamline tracking of benefits-related spend with Moss
Moss works alongside payroll systems by providing structured, well-organised details.When employees use Moss cards, Moss captures merchant-provided transaction details and supports review/export workflows, so payroll and finance teams can reference consistent supporting data when needed. Centralising this activity helps cut the back-and-forth during payroll. Instead of checking multiple tools for BIKs, reimbursements, and employee perks, the details live in one place.
For growing SMBs, consistent benefit data makes payroll more predictable and limits surprises during PAYE reporting. Teams often find that keeping all benefit-related information in a single system makes month-end reviews far more manageable.
Why Moss improves benefit reporting for payroll teams
PAYE becomes easier when finance teams have a clear, centralised view of benefit-related spending Moss supports spend management by capturing card transactions and reimbursements, routing approvals, and enabling budgets↗ and exports—helping finance teams keep spend data structured for downstream reporting. With this visibility, teams can track costs confidently and maintain year-round accuracy.
Book a demo today↗ to explore Moss’ Expense Management solution and gain insight into all employee spending.
