Payroll FAQs

Whether you have 1 employees or 1,000, payroll can be complex and time-consuming.  We’ve compiled a list of some of our most frequently-asked questions regarding payroll to help answer any queries or stumbling blocks that you may have.

Payroll FAQs 

What is included in a payroll service?

We provide a complete and reliable payroll service and can also assist with payroll software should this be required. You can expect:

  • Your own dedicated payroll clerk
  • Unlimited help and advice throughout the year
  • We take care of all dealings with HMRC and file all necessary returns
  • Production of all employee payroll documentation, including payslips either weekly, fortnightly, four-weekly, monthly, or on a quarterly basis.
  • Submission of your RTI Returns
  • Production and processing of your employee’s starter/leaver/year-end forms such as P45, P60 etc.
  • The processing and claiming of employment allowance on your behalf
  • Administration related to your employees’ holiday pay, SSP (Statutory Sick Pay), SMP (Statutory Maternity Pay) and student loan deductions

I already use a different Payroll Agent but would like to use your services, how easy it to do this?

This is relatively easy to do and requires little work on your end.We will require some information from your existing Payroll Agent, but we should be able to get this directly from them, making the whole process as smooth and seamless as possible for you.

What is the process to set up payroll?

Depending on the number and profiles of your employees, payroll set-up can be quite complex.  Using an accountant or other payroll providers can help you avoid making mistakes and ensure legislative adherence.  However, if you wish to set up payroll yourself, you will need to do this via HMRC, starting with the following forms that can be found here.   You will need to register as an employer before selecting payroll software and informing HMRC about your employees.

When should I pay my employees?

This is entirely up to you and what works best for your business and employees and could be weekly, fortnightly or monthly. With income tax and NICs, these have to be paid either monthly or on a quarterly basis. The money you need to pay to HMRC is always due by the 22nd of the following month (or the 19th if paying by post) when paying monthly.  For a quarterly payroll, it must be paid on the 22nd after the end of the quarter, for example, 22 July for the 6 April to 5 July quarter.  If you don’t meet your deadlines for PAYE payments then you may incur a fine.

How do I pay my PAYE?

There are various ways to pay your PAYE, we have summarized the options below.  You are no longer able to pay at the post office.

  • By direct debit: You will need to set this up through hmrc.gov.uk.
  • By online or telephone banking (faster payments or CHAPS), which is often the fastest way either same or next day
  • By BACS, which takes up to 3 working days
  • By debit or corporate credit card online at HMRC’s website
  • At your bank or building society through cash or cheque
  • By cheque through the post.

What information do I need to process an employee’s pay?

You will need the following information to set up a new employee on your payroll and decide their tax code.  You must keep this information in your payroll records for the current year and the 3 following tax years after this.

  • date of birth
  • gender
  • full address
  • start date

From your employee’s P45, you’ll need their:

  • full name
  • leaving date from their last job
  • total pay and tax paid to date for the current tax year
  • student loan deduction status
  • National Insurance number
  • existing tax code
  • Annual salary or hourly rate of pay

What do I do if my employee has not got a National Insurance number?

If your employee has never been issued a National Insurance number they can visit their local Department of Work and Pensions (DWP) for an interview. More information can be found on the DWP website.

What is the difference between a P45 and a P46?

You must give a to an employee when they leave employment.  It shows their PAYE reference code and how much they earned and paid in tax during the applicable tax year.  It consists of 4 parts and, as an employer, you should return Part 1 to HMRC and retain Part 1A for your own records.   Parts 2 and 3 are given to your employee.  If an employee loses their P45 or was not given one by their employer, then they previously would have filled in a P46 form.  However, these are no longer used and you will have to source missing information from your employee directly instead of using a New Starter checklist.

What is a P60?

A P60 must be given to an employee by 31st May and shows the tax that they’ve paid on their salary for the year (6th April to 5th April).  You can either produce P60s using your payroll software (your payroll service provider should complete this for you) or you can order the forms from HMRC if your software does not enable you to calculate P60s.

What is a P11D?

You must use a P11D  to inform HMRC of any Benefits in Kind you have given to any employees earning more than £8500 per year.   If you have paid tax on their benefits through your payroll then you do not need to submit a P11D.   If you do submit a P11D however, you’ll still need to submit a P11D(b) form so you can pay any Class 1A National Insurance you owe.

What is a P35 and does it still exist?

The P35 form used to collect a summary of a company’s PAYE contributions made during the tax year, alongside a P14 form.  Neither of these forms are still used since RTI reporting became compulsory in 2013.

My Employee is sick, are they entitled to Statutory Sick Pay?

You must pay SSP to an employee if they meet the qualifying conditions set out below.  SSP is set at a minimum amount and you are no longer able to claim this back from the government.  SPP costs must be absorbed into the business.

  • have an employment contract
  • have completed some work under their contract
  • have been sick for 4 or more days in a row (including non-working days) – known as a ‘period of incapacity for work’
  • earn at least £113 a week
  • give you the correct notice
  • give you proof of their illness, only after 7 days off

How much holiday is my Employee entitled to?

Almost all full-time workers above school leaving age are entitled to 5.6 weeks’ (28 days) paid holiday leave per year.  Part-time workers’ holiday allowance is calculated accordingly.  Employers can give more holidays than this should they wish.

My Employee is a pensioner, do they have to pay National Insurance contributions?

Once someone is over State Pension age they don’t have to pay Class 1 or Class 2 National Insurance contributions if they choose to carry on working. They only have to pay them on any earnings that were due to be paid before they reached State Pension age. To apply for an Age Exemption Certificate your employee should telephone HMRC on 0845 302 1479.  If you are self-employed, however, you may still pay Class 4 contributions. 

We hope this has helped you answer some questions you may have with regards to payroll. However, if you have a question that we haven’t answered, please contact us now and we’ll be happy to help.

If you want advice on your payroll, or would like us to run your payroll for you, you can view our services here.

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Chartered Accountants in Sunderland, offering expertise on everything from Tax and Business Planning,
to Accounts and VAT.