Introduction to PAYE and payroll for employers

Introduction to PAYE and payroll for employers

As an employer you will generally need to operate the HM Revenue & Customs (HMRC) PAYE system in order to collect the income tax and national insurance due via your payroll operations. If everybody that works for your business earns less than £116 weekly, you won’t need to register for PAYE purposes, however you will still need to keep accurate payroll records.

Running your payroll

At the time you run your employee payroll you will also need to make all the deductions required by the PAYE system. The payments you make to your employees should include their normal salary or wage, alongside any payments for sickness, maternity pay, and tips or bonuses.

The deductions you are required to make include income tax and National Insurance and pension contributions, you may also be required to deduct amounts for student loan debts.

You will be required to report your payroll to HMRC on or before each regular pay day. The payroll software you use will automatically calculate income tax and National Insurance deductions from employees’ wages and you can view your HMRC account to check the total you owe. You will generally need to make payments to HMRC on a monthly basis, although employers owing less than £1,500 monthly can make arrangements to pay the amount due on a quarterly basis.

Where you have made payments for statutory sick pay or maternity pay, you will need to send an additional report to HMRC to claim back the amounts paid.

The end of the payroll year

In April, at the end of each payroll year, you will need to run an additional annual report for HMRC advising of any benefits or expenses paid out throughout the year.

You can opt to run your payroll yourself or instruct a payroll provider to run your regular payroll. Even when you instruct a payroll provider to run your regular payroll, you are still responsible for collecting and maintaining records of all your employees’ details. Payroll providers offer varying levels of support, so it’s worth checking around before signing any agreements.

SQK Accountancy provide a variety of accounting, VAT and payroll services and we specialise in cloud accountancy. Get in touch to find out more about the ways we can help your business grow.

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