For international businesses entering the UK, setting up payroll can seem daunting due to unfamiliar regulations and requirements.
However, with proper guidance and preparation, you can ensure a smooth and compliant payroll process. Here’s a step-by-step guide:
Register as an employer with HMRC:
Your first task is to register with HM Revenue & Customs (HMRC) before your first payroll run.
This straightforward online process takes around five days, after which you’ll receive your PAYE reference number.
Get employee information:
To ensure accurate payroll processing, collect essential details such as full name, address, date of birth, National Insurance number, and tax code.
Accuracy is critical to avoid compliance and processing issues.
Select the right payroll software:
Choose HMRC-approved payroll software that handles all aspects, including tax calculations, deductions, and submissions.
Look for automated features, employee self-service portals, and HR system integration.
Set up and run payroll:
Input employee details into your software and decide on payroll frequency (e.g., weekly or monthly).
Ensure direct deposit details are correctly set up if applicable.
Calculate PAYE and National Insurance contributions
Your software will automatically calculate these amounts and any other deductions, such as pensions or student loans, ensuring compliance and accuracy.
Submit payroll to HMRC:
Under the Real Time Information (RTI) system, payroll information must be submitted to HMRC with each payment.
Timely and accurate submissions are key to avoiding penalties.
Provide payslips to employees:
It is a legal requirement to provide employees a payslip detailing gross pay, deductions, and net pay on or before payday. These can be distributed electronically or on paper.
Stay compliant:
Payroll isn’t a one-off task. Ongoing responsibilities include submitting Employer Payment Summaries (EPS), maintaining accurate records, and making timely PAYE and National Insurance payments.
Best practices for setting up payroll
Stay up to date with payroll legislation, audit processes regularly, and train your staff to ensure accuracy and compliance. If you need help navigating UK payroll regulations, our team is here to assist.
Contact us today to learn how we can assist you in setting up and managing your payroll.