How do I calculate PAYE / NI deductions if I pay my employees in euro and make the PAYE / NI payments in euro?
A. All PAYE and NI calculations must be completed in sterling, but you can make the corresponding payments in euro. If your employees are paid in euro, and you want to make the PAYE remittances in euro, then it is important that you follow the sequence of events shown below. Otherwise you might be faced with complaints and claims of shortfall and unpaid arrears if exchange rates move in the wrong direction (from your employees’ perspective). The sequence of events would need to be as follows: • Convert the gross weekly wage from euro to sterling. The rate to be used is the rate for the day when the calculation is performed. • Use the sterling figure to calculate the PAYE deductions on the weekly P11 record sheet. • Convert the net sterling figure back into euro using the same rate as at 1 above. (This is important, otherwise by using a different exchange rate employees could be paid “tax free” remuneration.) • When the time comes to make monthly or quarterly PAYE remittances, total the
