Any business owner in the UK is aware that there are a set of tasks and duties they must fulfill every month, especially if they are paying their employees via the PAYE system. But if you are a first-time employer and you are just starting out in your business, you need to know what these tasks are and how you can do them properly. Having the proper knowledge from the beginning can ease your worries – and leave you with assurance you need that everything has been done right.
What you should know about PAYE
As a business owner and employer in the UK, you are normally obligated to operate the PAYE system as an integral part of your business payroll. In essence, the PAYE system is run by HM Revenue and Customs in order to collect National Insurance and income tax from someone’s employment.
You are only exempt as an employer from the PAYE system if not one of your staff receives equal to or more than £112 every week, or if not one of your staff receives benefits or expenses. You may also be exempt from the PAYE system as an employer if your employees have other jobs or receive pensions.
If you are operating the PAYE system
If you are going to operate with the PAYE system for your payroll, then you need to fulfill particular tasks every tax month. The tax month is from the 6th of the month until the 5th day of the succeeding month.
Every month, on your employees’ salary or payday or before, you should make use of your chosen payroll management software in order to record your employees’ pay (which not only includes their wages, but other payments such as statutory pay for sick leave and maternity or paternity leave, tips if they are paid into your business’ till, and other payments such as bonuses, holiday pay, commission, travel allowance, cash prizes, and inducement pay, among others).
You also have the responsibility of calculating your employees’ pay deductions, which include their income tax deductions, deductions on National Insurance, contributions for pension, and repayments for student loans (if any). Another type of deduction is the Payroll Giving programme, where an employee can choose to donate to any charity and this donation will be directly deducted from their salary before their tax is deducted. Child maintenance payments are also deducted from an employee’s salary directly, and this should be included in your record of deductions.
It is also your responsibility to produce the proper payslips for your employees, and each payslip should include information on the employee’s total or gross salary (before deductions), details on deductions made, such as National Insurance and tax, and the employee’s net salary (after deductions).
Other information which can be shown in your payslips includes your employee’s number for National Insurance, their tax code, their salary or pay rate, and the full amount of their deductions and salary in the current year.
Granted, it is not that easy to take care of all the paperwork related to your payroll, especially if you don’t have the time, knowledge, or software in hand. What you can do, however, is turn to outsourced payroll service providers, who will make sure that all your payroll tasks and responsibilities are done in the proper way. you have complete assurance that your payroll is managed professionally and competently, whatever requirements you may have.
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