Payroll in the Isle of Man refers to the process of managing employee compensation, including salary payments, tax deductions, and National Insurance contributions. Payroll is a critical function for businesses as it ensures that employees are paid accurately and in compliance with tax and legal regulations. Our team handles Isle of Man company formation procedures, as well as provides payroll services for your business.
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Obligations for payroll systems in the Isle of Man
Payroll in the Isle of Man mustensure accurate calculation and accounting of both Income Tax Instalment Payments (ITIP) and National Insurance deductions. Payroll systems should be capable of recording the following information for each employee:
- Tax code for reference at each payday;
- Gross remuneration paid to each employee;
- Calculations for ITIP deductions at each payday;
- Amount of approved superannuation deducted from gross pay;
- Calculations for National Insurance at each payday, including total contributions, employee contributions, and contracted-out contributions;
- Totals of payments and deductions at the end of the year for completing specific forms.
Payroll systems in the Isle of Man also record and retain personal details for each employee, including full name, address, tax reference number, National Insurance number, date of birth, marital status, and residential status.
Payroll records and supporting documents must be kept for three years, and these records may be subject to inspection by the Income Tax Division.
We can ease the Isle of Man company registration and payroll procedures for you.
National Insurance Contributions in the Isle of Man
National Insurance contributions are taxes made by employees, employers, and self-employed individuals. These contributions are essential in the payroll system in the Isle of Man.
Contributions must be paid by individuals who are over the age of 16 and under the state pension age (66 years old as of 2024). The National Insurance contribution rates for employees and self-employed individuals in the Isle of Man for the tax year commencing on 6 April 2023, are as follows:
1. For employees:
- None if their weekly earnings are less than IMP 145 per week;
- If the earnings are above IMP 145 per week, employees will pay 11% of their earnings up to a limit of IMP 864 per week;
- If an employee’s earnings are above IMP 864 per week, they are required to pay a reduced rate of 1% on the additional earnings.
2. For employers:
- Rates depend on individual circumstances. Our team will help you with employers’ contributions when you set up a company in the Isle of Man.
3. For self-employed individuals:
- For income of IMP 7,540 or more per year, a flat-rate contribution of IMP 5.70 per week;
- In addition to the flat-rate contribution, an extra 8% contribution on profits between IMP 7,540 and IMP 44,928 per year;
- For income over IMP 44,928 per year, a reduced rate of 1% on the additional earnings.
National Insurance Contributions might seem complex, but our payroll system in the Isle of Man will simplify this process for you. Additionally, we can help you with the entire process of opening a company in the Isle of Man.
Statistics about contributions in the Isle of Man
National Insurance contributions go toward funding the State Pension, certain state benefits, and the National Health Service (NHS). This is why a good payroll system in the Isle of Man is essential and beneficial for each citizen. According to the Government website, contributions in the fiscal year 2020/2021 were as follows:
- National Insurance Contributions amounted to £219,256,000;
- 52% of the total contributions were allocated to funding retirement pensions;
- 4% of the total contributions were allocated to funding incapacity benefits.
If you are interested in learning more about payroll in the Isle of Man, you can contact our team for assistance. We can also recommend you to our partner accountants in the Isle of Man for guidance on other tax-related issues.