Ensuring that your business stays compliant with payroll regulations is crucial. From calculating wages and deductions correctly to reporting to HMRC on time.
So, here are a few important things you need to know about payroll so you can stay compliant.
You Need to Register as an Employer with HMRC
Before you begin paying your employees, you need to register as an employer with HMRC. This can be completed online and it should be done before the first pay day. Once you have registered, you will receive a PAYE reference number – this is required for submitting payroll information.
Ensure Correct Use of PAYE
PAYE (Pay As You Earn) is a system that collects Income Tax and National Insurance from employers. Along with these deductions, employers are also required to submit student loan and pension contributions where applicable. Using a cloud-based payroll software can ensure these deductions are correctly submitted to HMRC each time you run payroll.
Meet Minimum Wage and Holiday Pay Requirements
As an employer, you must meet the National Minimum Wage (NMW) or National Living Wage (NLW) depending on the age of your employees, plus provide the correct amount of annual paid leave that employees are entitled to.
Provide Payslips
You must send or give your employee access to their payslip either on or prior to payday. Payroll records also need to be kept for a minimum of three years and should include details of wages, bonuses, hours worked, the amount of tax and National Insurance paid, and any statutory payments that have been issued.
Using payroll apps and automated payroll software can make this process faster and easier, and ensure records are kept safe and secure.
Automatically Enrolled Workplace Pension Schemes
Employers are responsible for enrolling all eligible employees into a workplace pension scheme and making the minimum contributions. An employee does have the option to opt out of their pension scheme once enrolled, but it’s important to note that employers have an obligation to re-enroll employees every few years to give workers a fair chance to opt back in. Once re-enrolled, an employee will have the option to opt out again if they wish.
Regularly Review Payroll Regulations
Payroll laws and regulations, such as tax thresholds, statutory payment rates, and pension contributions, are revised regularly, so it’s important to stay up-to-date with the latest HMRC updates to ensure ongoing compliance.
Make sure you use a reliable source of information like GOV.UK or, if needed, you could talk to a professional advisor who will assist you in staying compliant. Ensuring any payroll apps or softwares that you use are up to date can also help you stay ahead of any changes.
Remain Compliant
Payroll compliance requires attention to detail, reliable software, and up-to-date knowledge of any recent changes. By understanding your obligations and implementing efficient and accurate payroll processes, you can stay compliant, avoid fines and penalties, and build a solid foundation for your business.