Keeping on top of payroll
Payroll is one of those parts of business that many dislike doing. You often hear people groaning that they’ve got to do their books, or submit this and that to HMRC. Of course, as Accountants we love all this, but we can see why it might be a real headache for some!

Whether you love it or loathe it, payroll processing is a necessary part of all businesses employing staff, or just a Director only business. And it certainly pays to keep on top of everything; your staff’s details and circumstances, plus updates and changes from HMRC and the government. In fact, there are two very important changes coming in to play in April, so keep reading to find out more.

What does payroll involve?

When deciding whether or not to outsource your payroll, it’s worth going over everything it includes to work out if you’d benefit from someone else managing it for you. It’s not just a case of making sure everyone’s wages land safely in their bank account on the right day. Although this will make sure everyone in the office keeps talking to you, there’s a lot more to it than that.

Wages: Ensuring wages are processed and paid on time. 
Payslips: Providing security payslips for each employee.
Compatible software: Using up-to-date payroll software. 
National Minimum and Living Wage: Keeping on top of updates and increases to make sure you never risk a fine.
HMRC submissions: Sending Real Time Information (RTI) and EPS submissions to HMRC each month.
Tax: Understanding all of the rules and regulations regarding taxation of employees and the rules which apply to Directors of a limited company.
Pensions: Making sure you’re Auto-Enrolment compliant.
Industry specific requirements: Filing the monthly CIS returns if you work in the construction industry.

How does outsourcing your payroll work?

If the above all sounds like a lot to keep on top of, outsourcing might be for you. We take responsibility for the weekly and monthly deduction processes, and also the annual returns. We basically become the payroll department of your business, small or large, one employee or five hundred. This releases you or staff that might have been allocated to these tasks to be more effective elsewhere, doing the things you want to do - and that you do best - in the business.

Important changes coming very soon!

Earlier we mentioned two important changes coming in in April. They are the National Living Wage increase and Auto Enrolment increase.

National Minimum Wage and National Living Wage increase

Most employees, with very limited exceptions, must be paid the National Minimum Wage (NMW) or the National Living Wage (NLW). Did you know the NMW was brought in by the Labour government in 1998? Before that it was up to the employer to decide what to pay, and trade unions would work hard to fight for good rates for their workers.

All the NMW rates will increase for the first pay period that begins on or after 1 April 2019, and it is important to get your pay calculations exactly right. Set to benefit 2.4 million workers, the NLW is increasing by nearly 5% - exceeding both inflation and average earnings. Last year it went up 33p and this year it will be 38p. Check out the new rates for all ages at:

So are you certain your NMW calculations are correct? Be aware of the following:

● Hourly rates vary according to the age of the worker, so keep a sharp eye on the birthdays of your younger workers to ensure they are paid at the right rate for their age band.
● Don’t ignore some of the hours worked. All overtime hours, time spent training, or standing in line for security checks, must be counted. Workers who undertake sleep-in shifts must be paid the NMW for the whole shift.
● Tips and gratuities can never be counted towards the NMW paid.

What’s the penalty of not paying the correct rate?

If you underpay by £100 or more across your whole payroll, HMRC can include your details on a list of employers in default, which is published quarterly. The penalty for failing to pay the correct amount of NMW can be up to £20,000 per employee, so it’s so important to calculate it correctly!

Auto enrolment contributions increase

Alongside salary, it’s your responsibility to keep on top of pension contributions and make sure you are paying the right amount into your staff pensions. The minimum contributions you and your staff pay into your automatic enrolment workplace pension scheme will also increase from 6 April 2019.

The minimum contribution for the employer will be 3% and 5% for staff, making a total of 8%. That’s 3% more than the current rate. The government reviews the range of earnings that the contributions are based on each year. Last year it was for everyone earning between £6,032 and £46,350 a year. As the employer, you can choose to pay the minimum employer contribution or the total contribution.

If you’d like to speak to us about managing your payroll, please don’t hesitate to get in touch for a chat.

Get in touch - If you'd like to find out more about how we can help you and your business pay less tax, generate more profits and create long-term wealth for you and your family, please get in touch now