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The notional payments to be dealt with under these rules are described in E4.1120–E4.1128. The rules apply whether the deductions are made on a cumulative basis or on a non-cumulative basis.

On making a notional payment to an employee, an employer must¹:

1. Ìý

   (a)ÌýÌýÌýÌý calculate the amount of tax which would be deducted from an actual payment of earnings at that time

2. Ìý

   (b)ÌýÌýÌýÌý remit to HMRC within 14 days of the end of the tax period (17 days in the case of electronic payment) the amount of tax so calculated

3. Ìý

   (c)ÌýÌýÌýÌý deduct that amount from any actual payment made to the employee during the same tax period; this deduction is not restricted by the overriding limit (see E4.1166)²

If the employer is unable to deduct the amount at (a) in the same tax period because of an insufficiency of earnings, the employer must still pay an equivalent amount to HMRC. All the PAYE and NIC due on the non-cash payment must be submitted to