7 Key Points About Payroll Processing Services!

Payroll perhaps is the least favorite task of any employer. However, with the introduction on RTI, Employer Allowance, Statutory Benefits, Legislative changes and of course Work Place Pensions – things have become increasingly more difficult. Payroll is no longer all about payslips. It is much more. And no matter what they say, managing payroll even a small two-person business is no piece of cake either. So, to effectively manage your payroll what are the things you need to ensure a complaint with the legislative requirements? Let’s take a quick look:

1. When do you need to apply for PAYE registration?
   PAYE is the abbreviated version of Pay as You Earn which is the system through which HM Revenue and Customs collects tax. But as an employer, you only need to put your employees on a payroll if.


• Your employees earn over £120 or more in a week, receive expense and benefits, work someplace else or are in receipt of a pension
• But even if the above is not the case – you certainly must keep payroll records!
  
  
2. Mind those Tax Codes!
   If the HMRC issues a tax code notice for an employee, you as an employer need to apply it. If the employee wishes to challenge it they can do so – but as an employer, it is your duty to follow the P6/P9 notices the HMRC sends you. No wonder most employers prefer to outsource payroll services.
   
   For the tax year 2020-21, the tax bands haven’t seen much of a change:
   
   

   From £12,501 to £37,500.00	20%
   £37,500.01 to 1,50,000	40%
   excess £1,50,000.01	45%
   Basic Rate Band (BR)	20%

   
   This means that the standard tax-free allowance continues at £12,500 i.e. the 1250L tax code is here to stay. Thus, you can earn up to £1042 a month without attracting any PAYE if you are on this tax code. However, for NIC it is now £732 monthly and £8788 yearly a marked difference from the previous year.
   
   
3. Don’t forget the National Minimum Wage
   Though the tax bands are still the same, the National Minimum Wage band rates have changed as below:
   
   

   NMW Grouping	2020	2019
   25 & above	£8.72	£8.21
   21 to 24	£8.20	£7.70
   18 to 20	£6.45	£6.15
   16 to 17	£4.55	£4.35
   Apprentice	£4.15	£3.90

   
   
   Besides, there are technicalities too, for instance, the apprentice rate is only applicable for the first year of apprenticeship. After that, you need to pay them as per the NMW. Circles within circles.
   
   
   
4. Meet the Real-Time Information Deadline
   There is no getting past RTI or Real Time Information. It is an online submission that needs to be done by the 5th of every month. In fact, it was only posted RTI that most employers began to feel the need for payroll services. Why? Because RTI indicates that you need to pay your employees on time with the right deductions towards PAYE and NIC. Plus, the PAYE and NIC liability need to be cleared by the latest, the 22nd of the next month. However, most savvy accountants recommend the 19th to be the ideal cut-off date giving you a bit of a grace period just in case!
   
   
5. There are changes to Employment Allowance
   Employment Allowance has now increased to £4000 yearly, an interesting development as all these years since its introduction it had been stuck at £3000 per year. Of course, you cannot carry this amount forward to the next tax year and the payment is restricted to the Employer’s NIC liability payments. While there are other eligibility factors as well, the moot point is that you need to have employer’s NIC liability and it should not have been more than £100,000 in the previous tax year, i.e. 2019-20.
   
   
6. Keep a tab on those Statutory Payments
   Did you know that you can reclaim up to 103% of the Statutory Maternity Pay payments you’ve made to your employee? Yes, provided you are an employer under SER or Small Employers Relief. Or does an employee with 1 year and 11 months tenure get Statutory Redundancy payments?  No – we are talking about full years when it comes to tenure, plus the age and employment contract factors.
   
   Thus, a small business payroll isn’t simply wages. It deals with actual employer/employee questions that tend to differ as per the situation.
   
   Global pandemics like COVID 19 have changed the face of Statutory Sick Pay or SSP overnight. Now, you can reclaim SSP in case your employee is diagnosed with COVID 19 but there are certain things you need to check as well. It seems like a lot of work, doesn’t it? Being an efficient employer is never easy.
   
   
7. Don’t ignore the Workplace Pension!
   The Pensions Regulator handles the occupational pensions and auto-enrolment elements. They can penalize employers from a penalty that starts at £400 with increasing interest on a daily basis. Furthermore, just enrolling your eligible staff one time is no solution as just consider re-enrolment which is a cyclic process that is set to happen three years down the line.
   
   The earnings trigger interestingly is still set at £833 monthly. Hence, if your employee is between 22 and SPA (State Pension Age) – you have an eligible jobholder. But can someone who doesn’t qualify to contribute to pensions, and as an employer are you supposed to make employer contributions too?
   
   Yes, if they earn above £833 regardless of whether they meet the age criteria or not, you surely have to!
   
   This is just the tip of the iceberg. There still are many more nuances to PAYE and Employment Allowance, not to mention other aspects of payroll like:
   
   What are?
   1. Furlonged employees
   2. Secondment
   3. HMRC employee expense guideline notice 490
   4. Benefits in kind
   5. Car benefits
   6. Entertainment benefits
   
   Whew, that’s quite a lot to keep in mind. No wonder most firms trust our payroll processing services.