Payroll

Motivating and retaining staff is one of the most challenging aspects of running a business. This is often acheived by offering staff a combination of cash and non-cash rewards. From a tax perspective, there are income tax and national insurance deductions that will need to be paid to HMRC. We offer a range of services including:

  • Preparing weekly/monthly payslips
  • Taking care of all HMRC compliance obligations and advising on your PAYE tax liabilities
  • Advising on tax efficient cash extraction options for directors
  • Access to a HR/payroll app that includes features such as holidays approvals, employee calendars, employee onboarding and document signing, and 24/7 access to payslips
  • We use a marketing leading payroll software called Brightpay (WINNER of Payroll Software of the Year 2018, Payroll Software of the Year 2019, Best Payroll Software 2020 and COVID-19 Hero (Supplier).

Payroll and PAYE FAQs

Salary vs Dividends

See our blog which explains what a tax efficient strategy looks like for directors.

What is PAYE tax

It is tax and national insurance contrbutions you must deduct from your employees each month and pay over to HMRC. As an employer, you must also pay employer national insurance contributions on the salary you pay staff. The rates of tax and national insurance and the bands to which they apply change each year.

What are my payroll obligations as a small business employer

  • Provide your staff with payslips each week/month. This provides a breakdown of their pay and deductions
  • Report the salary information to HMRC on the same date as you make a payment to your staff (the tax and ni is paid each month or quarterly if you are a really small business)
  • Issue staff with a P45 (summary of their year to date earnings and tax deductions) if they leave your business during the tax year
  • Provide staff with a P60 (end of year earnings summary) by 31 May following the 5 April tax year end
  • Issue P11Ds (summary of non-cash benefits) to staff by 7 July following the 5 April tax year end (and pay any tax theron)

Non-cash staff benefits

If you provide non-cash benefits to staff such as cars, medical insurance, life insurance or examination grants these must be declared on a P11d and submitted to HMRC. The employee effectively has to pay income tax on these benefits and their tax code is normally adjusted to reflect this. As an employer, you usually have to pay national insurance contributions of 13.8% on these benefits. The rules are complicated and each benefit has a different tax and national insurance impact. Click here for full reporting and tax implications of the various benefits.

Auto enrollment

As an employer, you must enrol qualifying staff onto your company pension scheme. For the 2021/22 tax year, the minimum contribution is 8%. Contributions are required on the earnings limit which is £6,240 - £50,270. As an employer, you must make a 3% contribution and your emplyee makes a 5% contribution.

Auto enrollment opt out

Your staff can choose to opt out at any time. If they opt out within one month, any contributions already made will be refunded (shown as a refund on the payslip the following month). They will receive a letter from the pension provider within a week of being opted in and they will need to contact the pension provider directly. You will then receive notification telling you they have opted out.