Understanding UK Payroll: A Comprehensive Guide
Employer registration in the PAYE system
Before we discuss the method of settling accounts with employees in force in the UK, it is worth devoting some space to the PAYE (Pay As You Earn) system. All employers, regardless of the form of their business, must be registered in the PAYE system.
Registration must be done before the first employee is employed, and no later than the day before his or her first payment (in the case of a LTD company, registration is also performed when the owner of the company is also its director). The employer can register in the PAYE system on his own or by using the services of a qualified accounting office. Our accounting office in England also provides this type of service – by working with us, the employer saves time and is guaranteed that the entire process will run smoothly and quickly.
The British PAYE payroll system is used to settle employee accounts. Thanks to it, the employer can easily calculate the amount of tax on the employee’s remuneration and the amount of social security contributions and pay the tax and contributions to the appropriate offices. However, the very documentation of settlements and payments made to the employee is called Payroll.
Payroll in the UK is nothing else than settling the employee’s payroll and documenting the settlement.
Under Payroll, the employer should:
- provide the employee’s salary,
- calculate the advance payment for income tax and social security contributions,
- issue and deliver payslips to each employee,
- pay tax and NI contributions on behalf of the employee
(no later than the 21st day of the month after which the employee received remuneration), - issue and provide the employee with an annual summary of remuneration,
- tax and NI contributions – P60 (or P45 if he has ended cooperation with a given person).
Documents confirming settlements are payslips, i.e. payslips that each employer systematically provides to employees. The document contains a summary of the employee’s remuneration and all contributions paid. Payslip must be given to the employee no later than payday. Issuing payslips is the responsibility of every employer, and failure to comply with the obligation is subject to a fine.
Payroll support in the UK
Each payslip should include information about the amount of remuneration before deductions, the type and amount of all deductions and the amount of remuneration after deductions. If salary advances have been paid, this should be indicated in the document. In addition, the payslip must include information on the form of remuneration payment.
Settlement of employees and issuing payslips can be done using a special computer program, but not all employers want to deal with it. In many cases, a better solution is to cooperate with an accounting office.
Accounting services for companies in the UK include HR and payroll services, including issuing payslips.
