Payroll - What You Need To Know

At McDade Roberts, many of our clients find that dealing with their own payroll is an unnecessary headache. We have a dedicated payroll department that you can outsource your payroll to so that you can get on with the rest of your business. Below is a top line guide of things you need to consider if you prefer to do it yourself.

New employer

As an employer you will be responsible for operating PAYE and calculating National Insurance Contributions (NICs). You will also be responsible for:

  • statutory sick pay (SSP)
  • statutory maternity pay (SMP) and
  • ordinary statutory paternity pay (OSPP)
  • shared parental pay (ShPP)

Real Time Information reporting

Employers, or their agents, are required to make regular online payroll submissions for each pay period during the year detailing payments and deductions made from employees on or before the date they are paid to the employees.

What tax do I have to deduct?

The tax due for a particular employee is calculated by reference to their gross pay with a deduction for their tax free pay which reflects their particular circumstances (using their coding notice and the pay date). The remainder of the pay is subject to tax and this is calculated using the Basic PAYE tools or software.

Tax is generally calculated on a cumulative basis, looking at the individual's circumstances for the tax year to date.

What about NICs?

NICs are payable by the employee and the employer on the employee's gross pay for a particular tax week or month and are calculated on a non cumulative basis.

When do the tax and NICs have to be paid to HMRC?

The tax and NICs should be paid to HMRC by the 19th of the month following the payment. Tax months run from the 6th to the 5th of the month, so if an employee was paid on 25 July (tax month being 6 July to 5 August) the tax and NI would need to be paid over to HMRC by 19th August.

Employers whose average monthly payments are less than £1,500 are allowed to pay quarterly rather than monthly. Large employers, with more than 250 employees, must pay tax and other deductions electronically.

Forms you will need to complete

You will need to complete the following forms or maintain the equivalent digital records:

  • P11 Deductions working sheet for each employee
  • P60 End of year summary for each employee
  • P45 Details of employee leaving
  • Starter Checklist. When a new employee starts you will need to advise HMRC so that you can pay them under RTI.

Penalties

HMRC impose penalties on employers who fail to:

  • make the online submissions on time
  • pay the liabilities on time
  • keep the necessary records
  • operate PAYE or NI correctly
  • make the correct statutory payments
  • provide HMRC or the employees with the relevant forms on time.

Automatic enrolment pensions

Automatic enrolment places duties on employers to automatically enrol 'workers' into a work based pension scheme from a specified 'staging date'. The main duties are:

  • assess the types of workers in the business
  • provide a qualifying automatic enrolment pension scheme for the relevant workers
  • write to most of their workers explaining what automatic enrolment into a workplace pension means for them
  • automatically enrol all 'eligible jobholders' into the scheme and pay employer contributions
  • complete the declaration of compliance and keep records.

How we can help

Does it all sound like hassle you could do without? Why not call us to discuss outsourcing your payroll headaches to us so that you can focus on the value adding areas of your business? We will be happy to discuss how to operate PAYE correctly, offer ongoing advice on particular issues, or carry out your payroll for you so please do contact us.