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I want to know what obligations I have to my employees

An employer has certain obligations in respect of any employees they engage. These obligations are there to assist both the employer and the employee to comply with their income tax requirements.

An employer must ensure that they:

• notify the Income Tax Division of any new employees using form T20 “Employee Commencing” within 14 days of their employment commencing;
• confirm the code to be applied for each employee and deduct ITIP and National Insurance from any payments of remuneration in accordance with the tax and National Insurance tables;
• pay any ITIP and National Insurance deducted to the Division by the due date;
• issue a payslip to the employee each time a payment of remuneration is made;
• complete a T14 “Isle of Man ITIP and National Insurance Deduction Card” at the end of the tax year and give a copy to the employee for their records;
• notify the Division within 14 days of ceasing to engage an employee using form T21 “Employee’s Leaving Certificate”.

An employer should complete the T14 and give the bottom copy of it to the employee at the end of the tax year. However, if the employee leaves or retires during the year, the employer should complete the T14 and give a copy of it to the employee at that time. The top copy should be retained by the employer until the end of the tax year for submission with the T37 “Employer’s Annual Return”.

If an employer operates a computerised payroll and cannot produce a T14 during the year, they may instead complete and issue a form T13 “Certificate of Tax and Pay Deducted” which is available from the Division. When the T14 is printed at the year end a copy can then be forwarded to the employee.

If an employee dies, their copy of the T14/T13 should be forwarded to their executors.

In addition, the Employment Act 1991 stipulates that an employer must provide an itemised pay statement to all employees, whether full or part-time, “at or before any payment of wage or salary”.

The pay statement must show the following:

• the gross amount of the wages or salary;
• the amount of any fixed deductions, i.e. tax and National Insurance;
• the tax code applied by the employer;
• the amounts of any variable deductions and the purposes for which they were made;
• the net amount of wages or salary after deductions; and
• the amount and payment method of each payment made when different parts of the net amount are paid in different ways e.g. the separate figures for a cash payment and a balance credited to a bank account.

Failure to provide a form T14 or payslip to an employee could result in a £250 penalty for non-compliance.