UK Employer Payroll Notes

P45, P60 and P11D: the employer year-end documents explained   Three forms, three different moments Employers deal with three similarly named HMRC forms, and mixing them up causes real problems: P60s handed out like P45s, P11Ds forgotten entirely, Class 1A National Insurance paid late. Each form belongs to a different moment in the employment story. Get the timing and the purpose straight, and payroll year-end becomes routine. P45: when an employee leaves The P45 is the leaving form. When an employment ends, the employer must produce a P45 without unreasonable delay, normally on the final payday. It comes in four parts with distinct destinations: Part 1 goes to HMRC. Parts 1A, 2 and 3 go to the employee. Part 1A is for the employee's own records, while Parts 2 and 3 go to the new employer or to Jobcentre Plus, so the next payer can put the employee on the right tax code. The P45 shows total pay and tax deducted in that employment up to the leaving date, plus the tax code in...

  If you employ staff in the UK, you know the P11D ritual all too well: listing every staff benefit, working out the taxable value of each one, and hoping you have not missed anything. For one-off or irregular perks like a staff party, relocation costs or a small gift, that process is wildly disproportionate. That is exactly the problem a PAYE settlement agreement, or PSA, solves. A PSA is a formal arrangement with HMRC that lets the employer settle the tax and National Insurance due on certain benefits and expenses directly, in one annual payment, instead of allocating each item to individual employees. Your staff get the benefit tax-free in practice, and you skip a stack of P11D paperwork. How a PSA works in practice You apply to HMRC for a PSA before the start of the tax year in which you want it to apply, although HMRC will accept applications up to 6 July after the tax year ends in most cases. Once the agreement is in place, any qualifying items you put through it are repor...

Statutory Adoption Pay: What Employers Must Get Right Statutory adoption pay is one of those areas where well-meaning employers get caught out simply because it comes up rarely. Maternity pay queries land on a payroll desk often enough that the process is familiar. Adoption pay, though, might arise once every few years in a small business, which means the rules feel unfamiliar just when they matter most. Getting it wrong can mean underpaying an employee at a stressful time and landing the business with a compliance headache. Here is a practical walkthrough of what employers must get right. Who qualifies for statutory adoption pay The rules mirror maternity pay in many ways, but the trigger points are different. An employee qualifies if they have been continuously employed for at least 26 weeks ending with the week they are notified of being matched with a child for adoption (or, for surrogacy arrangements, the 15th week before the expected week of childbirth). They must also have...

By John Thomas, Senior Accountant Employer National Insurance is one of the largest costs many UK businesses carry, and the changes that took effect in April 2025 are still working their way through budgets and hiring plans. With the 2026-27 tax year now the planning horizon, it is worth a clear-headed look at what employer's NIC actually costs, how the Employment Allowance softens the blow, and the legitimate ways to manage the bill. What changed and what it costs now From 6 April 2025, two significant changes took effect. The rate of employer's National Insurance rose from 13.8% to 15%, and the secondary threshold, the point at which employers start paying, fell from £9,100 to £5,000 a year. The threshold change matters as much as the rate rise. At £5,000, employer NIC starts biting much earlier in each employee's pay. For a full-time employee on £30,000, the annual employer NIC bill is now roughly £3,750, compared with about £2,884 under the old rules. Across a team ...

By John Thomas, Senior Accountant Real Time Information changed payroll forever in 2013: every pay run must be reported to HMRC on or before payday through a Full Payment Submission, the FPS. Get it right and payroll is invisible. Get it wrong and penalties, notices, and employee tax-code chaos follow. Here are the seven RTI mistakes HMRC actually penalises, and how to prevent each one. 1. Filing the FPS late The single most penalised RTI error. The FPS is due on or before the day you pay your employees, not after, and not "when payroll gets around to it". Late filing penalties apply per month, and they scale with the number of employees. Small employers get some leeway on their first default in a tax year, but repeated lateness is penalised automatically. Prevention: lock a payroll calendar with hard internal deadlines two days before payday, and make sure someone owns the submission step explicitly. If you outsource payroll, confirm in writing that your provider fil...

Hiring your first employee is a milestone, but it also switches on a set of payroll duties that catch many small employers out. Get the starter process right on day one and the monthly payroll runs smoothly. Run through this checklist for every new starter. Collect the right details before the first payday You need certain information before you can pay someone correctly. Ask the new employee for their full name, date of birth, home address, national insurance number, employment start date, and details of any student loan. You also need to know whether they have another job or receive a pension, because that changes which tax code applies. The cleanest route is the P45. If the employee has one from their previous job, it gives you their tax code, their pay and tax to date in the tax year, and their leaving date. If there is no P45, and this is common with first jobs, returning workers and overseas hires, ask the employee to complete HMRC's new employee starter checklist. It asks...