outbooks-co-uk-steps-involved-in-processing-the-payroll- (1).pdf

1. Payroll
November 24, 2022
The UK went through many upheavals after Brexit, but it’s fair to say that it remains a favourite destination for
many business owners. The United Kingdom, which has a population of over 65 million, accepts and celebrates
the many immigrants’ cultures, which is why international companies are eager to start a business here.
But before they do so, they need to understand the UK payroll obligations, employment laws, and tax
obligations. In this blog, we are listing the steps a business would need to take during payroll processing. But
first, let’s look at the UK’s payroll requirements.
An Insight Into Payroll in The UK
The UK has a well-developed and efficient payroll and payroll tax system. The law specifies the minimum salary
and the necessary tax and social security deductions. Additionally, the government offers a real-time web
system for tracking and collecting all payments from businesses. Companies are accountable for the correct and
prompt computation and payment according to different laws for employees and contracts.
Payroll outsourcing is common in the UK. According to research from the UK’s Chartered Institute of Personnel
and Development (CIPD), 39% of firms in the UK choose to outsource payroll, making it the most popular HR
function.
Regardless of whether payroll is handled internally or externally, it is still the company’s legal obligation to
adhere to UK payroll regulations. Punishments for non-compliance or inaccurate submissions are severe. For
instance, failing to follow the proper pension auto-enrolment processes may result in fines of £400 to £10,000.
PAYE and UK
The UK government’s PAYE (Pay As You Earn) program collects tax and national insurance from workers. Any
business with one or more employees must register, maintain records, and submit complete payment
information via the PAYE system. It’s managed by UK HMRC (HM Revenue and Customs).
Any new hire must have a tax code to be registered as an employee. Depending on their situation, this may be a
brand-new or old one from a previous job. Employers must provide all payroll data on or before the day
employees are paid (through a system called Real Time Information). An example of a Full Payment Submission
is this (FPS).
Although one can do this frequently, this is often done monthly. By the 22nd of the month following the payroll
date, one must make payments owed to HMRC via the PAYE system.
Any additional mandatory employee payments are made through PAYE in addition to the average remuneration
Brochure
Outbooks is a leading provider
of Virtual Bookkeeping &
Accounting Services across
the UK.
Let's help you!
 +44 330 057 8597
 info@outbooks.co.uk
London
Suite 18, Winsor & Newton
Building,
Whitefriars Avenue,
Harrow HA3 5RN
Download PDF
Or fill our form
Is QuickBooks as Good as an
Accountant?
What Are The Steps Involved in
Processing The Payroll?
How do I Review The Books
Prepared by my Team?
What Does Xero Accounting
Software Do?: Expectations vs
Reality
What Exactly Does A Bookkeeper
Do? Will They Ever Rule the
World?
How Much Should a Bookkeeper
Cost?
What Are the 3 Most Important
Skills Every Accountant Should
Have?

Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

2. Any additional mandatory employee payments are made through PAYE in addition to the average remuneration.
Sick pay, maternity pay, paternity pay, and redundancy pay-outs fall under this category.
A 6-Step Payroll Processing Guide
1. Collect Employee Tax Information
The first stage in the payroll processing procedure is getting the relevant tax information from employees.
Before beginning the new position, an employee must provide the employer with a valid identity for this
process. An employee must fill out this information unless they are an independent contractor.
At first, all of this data gathering may seem overwhelming. Payroll software that includes leave and attendance
management must be used.
2. Create a Record Management Process
You need to keep a variety of records of the employees. To make the necessary payroll deductions, you need
evidence of any retirement and benefit choices they have made. Additionally, all employee handbooks, tax
forms, employment contracts, and training must be completed, signed, and preserved for compliance.
Employee record management is a simple method for managing all these moving parts. An improper pay check
may occur from incorrect information on an employee’s record.
3. Set a Pay Schedule
It’s time to choose the pay frequency the employer wishes to provide the staff now that the employee data is
correct and updated. We’ve discovered that firms often have bi-weekly, semi-monthly, or monthly pay periods.
Irrespective of the schedule you decide on, it’s crucial to let the staff members know when they can expect their
pay checks.
4. Start Tracking Time And Attendance
Time tracking and payroll processing are interdependent. Employee compensation is based on time factors like
hours worked. A simplified time and attendance procedure are essential to capture and record employee hours
correctly. To prevent overpaying or underpaying employees, keep track of time-related things, including meals,
breaks, and accruals.
All workforces benefit from time cards, timesheets, and mobile applications, allowing employees to clock in
from different locations, time zones, and projects.
5. Calculate Deductions And Pay The Employees

Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

3. 5 Ca cu ate educt o s d ay e p oyees
Calculating deductions is the next stage in your payroll procedure now that you have time and attendance
monitoring. You must first comprehend the various forms of deductions to perform this.
This computation yields a value that represents the net salary of your employee. Any pre-tax, required, and
post-tax amounts are deducted from the gross employee pay once it has been calculated.
It’s time to start processing payroll after determining your employee’s take-home compensation.
6. Pay Payroll Taxes
Following the processing of payroll, employers still have work to complete. Employers must send payroll taxes
to the proper government departments. You can also be required to make state payroll tax filings and other
payments, depending on where your company conducts business.
To Sum It Up
Our 6-step payroll processing guide can help you understand payroll processing in the UK. However, it is best
to outsource your payroll processing to a third-party experience vendor. It frees your time, saves resources, and
helps you gain expert help.
BY: Vinod
   
RELATED STORIES

Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

4.  Subscribe to our Newsletter First Name* Last Name* Email*
* Mandatory fields
Subscribe
London
Suite 18, Winsor & Newton Building,
Whitefriars Avenue, Harrow HA3 5RN
Registration No: 10746177
 info@outbooks.co.uk
 +44 330 057 8597
   
 Download Pricing Calculator
About Us
Services
Referral Program
Team
How it Works
News & Press
Outsourcing FAQs
Data Security & GDPR
Careers
Blog
Privacy Policy
Data Security
Policy
Terms &
Conditions
Contact Us
Copyright © Outbooks 2022 | All Rights Reserved.

Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

5. 
Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

6. 
Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

7. 
Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    

8. 
Services Engagement Model Referral Program Resources Contact Us
 +44 330 057 8597  info@outbooks.co.uk    