Definition
The process of calculating and distributing employee wages, including deductions for tax, National Insurance, pension contributions, and other items. Payroll also encompasses maintaining records required by HMRC.
UK Context
UK employers must operate PAYE (Pay As You Earn) in real time, reporting payments and deductions to HMRC on or before each pay date via Real Time Information (RTI) submissions. Failure to file accurately can result in penalties under the Income Tax (Pay As You Earn) Regulations 2003.
Best Practices
- Run payroll on a consistent schedule and submit RTI filings on or before pay date
- Reconcile payroll data monthly against bank statements and HMRC records
- Keep payroll records for at least three years as required by HMRC
Frequently Asked Questions
How often must UK employers run payroll?
Employers must run payroll each time they pay employees, whether weekly, fortnightly, or monthly. Each pay run requires an RTI submission to HMRC on or before the payment date.
What records must employers keep for payroll?
Employers must retain records of gross pay, deductions, tax codes, National Insurance contributions, and statutory payments for at least three years after the end of the tax year they relate to.