UK Payroll Services | PAYE, NI, Pensions and RTI

The moving parts

What a pay cycle involves

A UK payroll is not one calculation. It is a stack of separate obligations that happen to land on the same day, each with its own rules and its own way of going wrong.

PAYE

Income tax deducted at the code HMRC has issued, on the right basis, with code notices actioned as they arrive rather than at the end of the quarter.

National Insurance

Employee and employer contributions at the correct category letter, with directors calculated on an annual earnings period rather than period by period.

Holiday pay

Straightforward for fixed hours, genuinely difficult for variable ones, where entitlement and pay have to be worked out on the right reference period and basis.

National Minimum Wage

Checked against actual working time rather than contracted hours, allowing for travel between sites, deductions and salary sacrifice that can pull pay under the rate.

Statutory payments

Sick, maternity, paternity, adoption, shared parental and bereavement pay calculated on the right average earnings, evidenced, and recovered where you qualify.

Pension duties

Assessment every pay reference period, contributions on qualifying earnings, notices issued, opt-outs processed and the three-yearly re-enrolment tracked.

Other deductions

Student and postgraduate loans at the right plan type, attachment of earnings orders in the correct priority, and salary sacrifice applied in the right order.

RTI submissions

An FPS on or before every payday and an EPS where a recovery, a CIS deduction suffered or a nil payment applies. Late filing is visible to HMRC immediately.

Year-end

Final submission, P60s by the end of May, P11D and P11D(b) by early July, Class 1A paid by late July, and the new tax year opened without a gap.

Where the money is lost

Where most payroll arrears come from

In our experience the tax rarely causes the expensive problem. Software calculates PAYE reliably and HMRC notices quickly if it does not. The costly errors are the ones nobody is checking for, because no system flags them and no deadline announces them.

Holiday pay on variable hours. Where somebody's hours change, both entitlement and the rate of pay have to be worked out on an averaging basis over the correct reference period. Businesses paying basic rate for holiday when the worker regularly earns overtime and shift premiums are accruing a liability that only surfaces when someone leaves and adds it up.

National Minimum Wage. Almost never a deliberate underpayment. It happens through time spent travelling between sites that was never counted, deductions for uniforms or equipment, salary sacrifice that pulls pay below the rate, or shifts rounded down to the half hour. HMRC assesses arrears across the whole affected workforce and back several years, with a penalty on top and public naming.

We check both every cycle as part of the run rather than as a special exercise, and we tell you when something is drifting towards a problem instead of after it has become one.

The year in dates

The payroll year and its deadlines

Every payday

FPS submitted on or before the day people are paid. Pension contributions uploaded. Payslips issued.

Every month

EPS by the 19th where needed, CIS return by the 19th where it applies, and PAYE paid to HMRC by the 22nd electronically.

April and May

Final submission for the tax year, new tax codes applied, and P60s issued to every employee by 31 May.

July

P11D and P11D(b) returns filed by 6 July, copies to employees, and Class 1A National Insurance paid by 22 July.

FAQ

Frequently Asked Questions

The Full Payment Submission is the tight one: it has to reach HMRC on or before the day you pay people, every single time. Beyond that, PAYE and National Insurance are payable to HMRC by the 22nd of the following month electronically, the Employer Payment Summary by the 19th where one is needed, P60s to employees by 31 May, P11D and P11D(b) returns by 6 July, and the Class 1A National Insurance on benefits by 22 July.

Holiday pay and National Minimum Wage, not tax. PAYE is arithmetic and software handles it. Holiday pay for variable-hours staff requires averaging over a reference period and is frequently guessed at. NMW is breached accidentally through unpaid travel between sites, uniform deductions, salary sacrifice pushing pay below the rate, or rounding down time. Both produce arrears going back years and neither is caught by a payroll system.

An employee earning at or above the lower earnings limit, once they have been off sick for the qualifying period, paid for up to 28 weeks. The detail matters: linked periods of sickness, the difference between qualifying days and working days, and the fact that SSP cannot be recovered from HMRC by most employers. We calculate it, evidence it and show it separately on the payslip.

Gross pay, the amount and purpose of every deduction that varies, net pay, and where pay varies by time worked, the number of hours being paid for. It has to be provided at or before payday, and the right to one now extends to workers as well as employees. Payslips that show a single net figure with no breakdown are non-compliant and are usually a sign of other problems.

For National Insurance, yes. Directors have an annual earnings period rather than a monthly one, which means their NI is calculated cumulatively across the tax year rather than period by period. Get it wrong and the annual figure is out even though every individual month looked correct. It is a routine source of year-end discrepancies in small company payrolls.

Three years from the end of the tax year they relate to for HMRC purposes, and six years for National Minimum Wage records. In practice we keep longer, because employment tribunal claims, HMRC status enquiries and historic underpayment questions all tend to arrive after the minimum period has expired.

UK payroll