The United Kingdom has a population of more than 67 million people and is the 5th largest economy in the world. There are unique payroll and tax requirements for companies operating in the United Kingdom, and many business entity options for companies looking to expand.

Payroll/Tax Considerations:

  • Minimum wage as of April 2021:
    • Ages 23+ GBP 8.91
    • Ages 21-22 GBP 8.36
    • Ages 18-20 GBP 6.56
    • Under 18 GBP 4.62
    • Apprentice GBP 4.30
  • 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
  • Residents are liable to pay income tax on all income. Anyone who stays in the UK for more than 183 days are automatically considered residents
  • 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
  • There are a variety of visa categories and work permits
  • Sick pay policies in the UK have been updated due to COVID-19. The UK government has changed the 3 waiting day rule for sick pay if the sickness is coronavirus-related. Employees will receive a full week of Statutory Sick Pay with no 3 day waiting required
  • 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)

HR/Statutory Requirements

  • Employees are legally entitled to 28 days of paid holiday per year. People with varying or irregular hours are entitled to paid time off for every hour of work
  • Maternity leave is 52 weeks, Paternity leave for 1-2 consecutive weeks cannot be taken until after the birth
  • Employees are eligible for severance for many reasons. Pay ranges from half-week to one and half-weeks’ of pay for each year of service
  • The pension system is known as the New State Pension and an employee is eligible after 10 years of working and making contributions to the National Insurance. The max amount of pensions an employee can receive is GBP 175.20 per week and is typically paid every 4 weeks

Holidays in the UK

  • January 1: New Year’s Day
  • January 3: New Year’s Day observed
  • April 15: Good Friday
  • May 2: Early May Bank Holiday
  • June 2: Spring Bank Holiday
  • June 3: Queen’s Platinum Jubilee
  • December 25: Christmas Day
  • December 26: Boxing Day
  • December 27: Substitute Bank Holiday for Christmas Day

The UK has unique and challenging payroll, tax and benefit regulations. Our cloud-based payroll platform combined with our US team and in-country experts can help you navigate payroll and employment laws to ensure compliance in the United Kingdom. Talk to us today about simplifying your UK payroll.