How much can I pay an employee before I need to deduct tax and National Insurance?

Employees start paying Income Tax once their earnings pass their personal allowance (spread across the year via their tax code), and employee National Insurance is deducted once pay in a period exceeds the primary threshold. These thresholds are set annually and your payroll software applies them automatically based on each employee's tax code and NI category, so you don't need to calculate them by hand. Because thresholds and codes can change and vary by individual circumstances (e.g. multiple jobs, benefits in kind), it's worth having an accountant check your payroll setup is using the current figures.