Payroll
The process of calculating, reporting and actioning payments to employees is commonly referred to as “payroll”.
Payroll is usually “run” regularly, often on a weekly or monthly basis, when staff are employed. The process involves working out how much each staff member is due in salary, starting with their pay before tax as agreed with each employee (or their hours worked if on an hourly basis), then deducting Income Tax, National Insurance contributions, and any other deductions such as student loans. The remainder referred to as net pay, is then paid to the employee.
Employers must pay any amounts kept back from employees to the relevant parties, for example, tax and National Insurance contributions must be paid to HMRC, and pension contributions to the pension provider.
Employers have a duty to report to HMRC various details of each “pay run”, electronically, on or before the day the employees are paid – this process is known as RTI (Real Time Information).
Good to know
Employees have the right to receive a payslip on or before the day they are paid (there are a few exceptions to this rule). The payslip must show certain pay related information and be provided to the employee either in a printer or electronic (online) format.
Employers need to make HMRC aware each time an employee starts or leaves and are also responsible for ensuring that tasks such as statutory leave and statutory pay are managed correctly.
Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. If you employ at least one person you are an employer and you have certain legal duties.
For many businesses, the thought of running payroll and the associated compliance tasks can act as a barrier to employing staff. At Caroline Hinde Accountancy we can guide you through the whole process from initial registration to managing your regular pay runs for you.
As with our other services we are flexible so feel free to arrange a consultation for us to discuss how we can help you.