Payroll is a huge part of running a business. PAYE is the typical method used by employers for payroll.
What is PAYE?
PAYE is the HMRC’s system to collect Income Tax and National Insurance from employment. You are not required to register for PAYE if none of your employees earn over £116 per week, get expenses and benefits, have another job or get a pension.
You can operate PAYE by either:
· Paying a payroll provider
· Doing it yourself using payroll software
Running your own payroll: Reporting to the HMRC
If you decide to run payroll independently, you must report your employees’ payments and deductions to the HMRC before each payday, this is done through a Full Payment Submission (FPS).
Payroll software can be used to work out how much tax and National Insurance you owe.
Reductions, such as statutory pay, can also be claimed using an EPS form.