In this 9 minutes video I have discussed 10 Key things a payroll professional needs to know to be able to run payroll efficiently and effectively.
Payroll software, Workplace pensions, PAYE (tax and NIC) class 1 primary national insurance and class 1 secondary national insurance, other deductions such as attachment of earnings order, rental, loans and advances, student loan deductions, statutory payments such as statutory maternity pay, statutory paternity pay and statutory sick pay etc., annual leave entitlements, policies and calculations, payroll forms such as p45, p60, p11d and HMRC employee starter checklist, RTI (real time information) full payment submission fps, employer payment summary eps and finalising payroll.
Every month you have to pay HM Revenue and Customs (HMRC): the tax and National Insurance (and any other deductions) you owe as reported on your Full Payment Submission (FPS) in the previous tax month
minus the reductions on any Employer Payment Summary (EPS) you sent before the 19th in the current tax month. Pay what you owe by the 22nd of the month (or the 19th if paying by post) - you may have to pay a penalty if you don’t.
As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.
You don’t need to register for PAYE if none of your employees are paid £112 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.
Payments and deductions
When paying your employees through payroll you also need to make deductions for PAYE.
Payments to your employees
Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay.
Deductions from their pay
From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.
Reporting to and paying HMRC
Reporting pay and deductions
If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday.
Your payroll software will work out how much tax and National Insurance you owe, including an employer’s National Insurance contribution on each employee’s earnings above £155 a week.
You’ll need to send another report to claim any reduction on what you owe HMRC, eg for statutory pay.
You’ll be able to view what you owe HMRC, based on your reports. You then have to pay them, usually every month.
If you’re a small employer that expects to pay less than £1,500 a month, you can arrange to pay quarterly - contact HMRC’s payment enquiry helpline.
Other things to report
As part of your regular reports, you should tell HMRC when a new employee joins and if an employee’s circumstances change, eg they reach State Pension age or become a director.
You have to run annual reports at the end of the tax year - including telling HMRC about any expenses or benefits.