What is involved in running a payroll

Registering as an employer:

The first step in running payroll is to register as an employer with HM Revenue and Customs (HMRC His Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support, the administration of other regulatory regimes including the national minimum wage and the issuance of national insurance numbers.). This involves obtaining an employer reference number (ERN) and setting up a PAYE PAYE or Pay as you earn is an HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment. (pay as you earn) scheme.

To set up a Pay As You Earn (PAYE) scheme with HMRC, you must contact the New Employer Helpline on 0300 200 3211 or register online via https://www.gov.uk/register-employer. External website

Understanding your payroll responsibilities:

As an employer, you have certain responsibilities when it comes to payroll. This includes calculating and deducting the right amount of tax and National Insurance A system of contributions paid by workers and employers in the UK, which funds various state benefits, such as the State Pension and Jobseeker's Allowance. contributions from your employees' pay, providing payslips, reporting payroll information to HMRC, and keeping accurate records.

Determining employee pay and deductions:

When it comes to calculating employee pay, there are several factors to consider, including their hourly rate or salary, any overtime or bonuses they've earned, and any deductions such as tax, National Insurance, and pension contributions.

Company’s legal requirements.

Your records must show you have reported accurately. You are required to keep basic payroll records for a minimum of 3 years, starting from the end of the tax year they relate to, but it's recommended that companies keep records for 6 years. HMRC can request records for up to 6 years and most automatic enrolment pension records have to be kept for 6 years (plus the current year).

If the records are not available, information will be estimated.

Keeping accurate records:

As an employer, you're legally required to keep accurate records of your payroll and employee information. This includes records of pay, tax, National Insurance, and any other deductions, as well as employee details such as their name, address, and date of birth. Pension information must also be kept, including opt in requests, the date pension letters were sent to workers and the deductions made.

Data protection / GDPR

You must follow data protection rules if your business stores or uses personal information.

Record Keeping

If you do not keep full records, HMRC may estimate what you have to pay and charge you a penalty of up to £3,000.

Dealing with employee absences and leave:

When it comes to managing employee absences and leave, there are certain rules and regulations you'll need to be aware of. This includes providing statutory sick pay Statutory sick pay refers to the pay an employer must give you if you’re too ill to work. It’s paid to you by your employer for up to 28 weeks, based on certain eligibility criteria - the cost of SSP is no longer able to be recovered - SSP is no longer reported to HMRC on your EPS submissions (SSP Statutory sick pay refers to the pay an employer must give you if you’re too ill to work. It’s paid to you by your employer for up to 28 weeks, based on certain eligibility criteria - the cost of SSP is no longer able to be recovered - SSP is no longer reported to HMRC on your EPS submissions) for eligible employees, and allowing eligible employees to take time off for maternity, paternity, and adoption leave.

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