Managing payroll in the United Kingdom has unique tax and payroll requirements. If you are just getting started or expanding your business in the UK, there are many considerations to ensure compliance.

Companies must file with Her Majesty’s Revenue and Customs (HMRC) as well as manage Pay-As-You-Earn (PAYE) to file taxes and National Insurance contributions. Based on the industry and type of business, you must submit payroll taxes monthly or quarterly to ensure compliance.

Employers must comply with PAYE responsibilities including:

  • Recording payments of salary, wages, and other pay
  • Calculating deductions for taxes and national insurance
  • National insurance contributions for employee earnings
  • Creating payslips for every employee
  • Reporting all data to HMRC in a Full Payment Submission (FPS)

The UK tax year begins April 6th, requiring employers to provide several reports to HMRC prior to April 5th including; final RTI submission, a P60 for each employee, P11d reporting (if needed), and Benefits in Kind reporting and payments.

Pension auto-enrollment schemes and contributions can be set up to coincide with payroll to simplify calculations, continuous assessment for each employee, and ensure compliance with UK auto-enrollment regulations.

UK policies including unfair dismissal, minimum wage, unauthorized deductions from wages, statutory redundancy pay, paternity and shared parental leave have not changed due to Brexit.

Sick pay policies in the UK have been updated due to COVID-19. In accordance with the current labor laws in the UK, legislative requirement for statutory sick pay (SSP) mandates an employee must have 4 consecutive days missed from work due to illness before the statutory sick pay takes affect. The first 3 working days are unpaid, an employee begins to receive payment on the 4th day. Due to the COVID-19 crisis, the UK government changed the 3 waiting day rule if the sickness is coronavirus-related. Employees will receive a full week of Statutory Sick Pay with no 3 day waiting required.

The UK has unique and challenging payroll and benefit regulations – our combination of US-based and in-country experts can help you navigate payroll and employment laws to ensure compliance in the United Kingdom. Talk to us today about getting your UK payroll under control.