Understanding the Nuances of UK Payroll

  • 2023-01-13

Whether you are running an established business or are just starting out, payroll can be a complicated process to get to grips with. As you will need to pay your employees and potentially even yourself wages, understanding the nuances of UK payroll can be worthwhile to protect yourself from issues.

Important information regarding payroll

Payroll was designed to bring the payment of employees’ wages, the financial records documenting pay and the payment of employee taxes to the HMRC under one process. All employees within a business will need to be registered to ensure compliance and any companies that fail to establish payroll for their staff may face penalties or fines.

How to register for payroll 

Using the Pay As You Earn (PAYE) government scheme, there are a host of steps that need to be completed to register with UK payroll. These are:

1. If you haven’t already, start by registering your business with the HMRC as an employer

2. Register each individual you employ using a Full Payment Submission (FPS). You will be required to provide personal details such as full names, addresses and dates of birth, alongside tax codes, start dates and salaries. You will need to attach the employee’s P45 and student loan information (if applicable) 

3. Set up your PAYE system and get your payroll process underway

While this may seem straightforward, there will be additional information that will need to be provided every time you pay employee wages (whether this is weekly, fortnightly, or monthly) to ensure that all payments and taxes are paid correctly and are up to date.

Is it worthwhile to undertake payroll processes yourself?

Many businesses start off completing payroll themselves, but quickly realise that the processes involved can take some significant time and effort. As a well-managed system can be imperative to ensure the correct monitoring of finances, payment of taxes and more, it may be worthwhile to bring in an employer of record (EOR) to do the hard work for you. This specialist (or team) can act as a full legal employer for your workforce while tackling the HR employer-related responsibilities and tasks that you simply don’t have time to undertake.