payroll for employees in the uk

Payroll For Employees In The UK – A Beginner’s Guide

It could be overwhelming to come across complicated issues around payroll. This post has covered you and it will help you to understand smooth processing of payroll for employees.

In this post we will focus on:

payroll uk

  • What Is Payroll?
  • How Does Payroll Work?
  • Guide To Set Up Employee Payroll
  • Payroll Tax Deduction


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What Is Payroll For Employees?

In simple words, Payroll for Employees is a list of an organisation’s employees with the details of the monthly amount they are to be paid or the total amount to be paid as wages. Whereas, in treasury management it is known as a list of company’s employees who received payments against their services and work provided along with other work benefits.


How Does Payroll Work?

With the basic functioning of payroll for employees, there comes payroll tax deduction as well which works through PAYE (Pay As You Earn) system in The UK. On the one hand, where employers are liable to handle the details of employees and their wage, they have to take care of how much tax each employee owes. Employers deduct this tax amount from every employee’s pay package and then send it to HMRC (Her Majesty’s Revenue And Customers).

This happens to employees every time they get paid. Commonly with large businesses this practice is done on a monthly basis. However, there are workers who get their salary on the basis of working hours, the process is the same for them, anyway.

Keeping accounts up to dates is very important to ensure that the employees get the right amount of salary that was decided with them. Moreover, by 19th of every month the employers are required to send the deductions to HMRC if it is the case of pay by post. If you pay electronically then by 22nd of every month, this should be done.


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Guide To Set Up Employee Payroll:

The moment when even a single employee is hired, the employer is required to set up payroll for the employee. It may appear to be challenging, but below is such a breakdown step by step that will make it look simple for you.

  • PAYE for New Employees: For a new employee, the first need is to set up PAYE. have a record of their wages, make payslips and calculate the deductions. As this information is needed to be forwarded to HMRC through a document called FPC (Full Payment Submission).
  • Employee’s Tax Code: usually tax code is on employee’s payslip or easily be found in the pension letter.
  • National Insurance Number: Like Tax code, national insurance number is also found in the payslip or pension and benefits letter.
  • Form P45: This form has the tax details till the date which will help the new employer to find the tax code and HMRC has the checklist to have an idea how much a new employee owes.


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Payroll Tax Deductions:

It is challenging to keep a track of each employee’s tax deductions. There is a calculator offered by HMRC which helps in this regard, even then you keep the double check rather than rely over the tools to ensure each employee gets the right amount of his salary.

It is suggested to use payroll special softwares or to get ease by the services of specialist firms. Especially when your business grows and expands in terms of such workings, these services will offer smooth and hassle free processing.



You have enough understanding of payroll for employees if you have made it this far, congratulations! Now that you know to register for payroll and send the required details to HMRC, the good news is that there are alot of options to choose over how to do payroll tax for the new employees. Although the UK Government appreciates online business, you can do it via telephone banking, cash at your bank branch or even pay through mail.

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