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News,May 2018

how to run payroll

A Guide About How to Run Payroll in UK!

24/01/2023Payroll & PAYE

When you are in the role of an employer in the UK and you aim to run the payroll on your own, there are certain requirements that you need to fulfill before you do it. The prior most thing to understand is how to run payroll. When you are experiencing giving payment to your employees for the first time, you consciously need to be aware of the facts about when to pay your employees and how to pay. Employing the staff and paying them will directly require running the payroll system. There are several options for accounting forms that can offer help in this regard. However, you still require to know better how the payroll system works. Regardless of your decision of doing your payroll on your own internally or outsource help from the accounting firms, the key factors you must be aware of include how you define the payroll, how you set up the payroll, how to run it, how to manage tax reporting using the payroll, benefits or deduction, and what is the amount that you should be paying to your employees. Further, this post will guide you to develop a better understanding of payroll basics, how to define it and how to run it on your own.   Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about how to run payroll in the UK whether you are running a small or large business.   What is Payroll? In simple words, the payroll is a kind of document that has the details of your employees and what is the amount of their earnings. Moreover, the real process of paying the employees is done under the payroll. The management of employees’ pay is done through it. The process of payroll includes the following listed factors: Maintain a record of financial details Paying the national insurance and tax of the employees Making the calculation of the time when the employee has not worked like maternity leave, other holidays, and sickness Management of the benefits and bonuses Calculation the wages of employees and then issuing them Even when you take the instance of small businesses, management of the employee’s wages, calculation and issuing is quite a lot of work. You will have to ensure the facts like accuracy and dependability. This is the reason the businesses choose to outsource the services of a specialist to do this job so that they can rely on the accounting skills and there are no mistakes made in the record. This becomes mandatory for any kind of business when they hire employees. Even in the case of the director being the only employee, you will have to run the payroll.   How to Run Payroll for Your Business in the UK? The first thing you are required to do is get registered with HMRC as an employer before you plan to set up the payroll for your employees. You will receive the PAYE reference number. It is imperative to mention here that you will also receive the PAYE Accounts Office Reference, these two are not the same. However, both of them will be required to the process of filing the data of payroll with HMRC. Once you are done with this part of the process, now you have to make a decision about whether you want to outsource the accounting services to run the payroll or you want to do it internally. In the following, there is an explanation of how to run the payroll step by step.   1- Get Registered as an Employer The most important thing to do first when you are in the role of an employer is to get registered with HMRC. You will receive a PAYE login after this step.   2- Select Your Software for Payroll Now since you need to record the detail of the employees, you will need the software for payroll. So the next step is to choose the suitable option of payroll software for your business. This will help you to calculate the amount and make the required deduction. You are then good to go with informing HMRC about these details.   3- Gather the Information to Keep the Records One of the important steps is to gather the required information and then maintain a record of this information. The information that you must require includes notices of tax codes, leaves of the employees, the employee absence due to sickness, taxable benefits and expenses, payroll documents, and report that you make for HMRC.   4- Inform HMRC About the Details of Your Employees Before you plan to move to the steps of recording the details of the employees, you will have to get in touch with HMRC and inform them about your number of employees and the new hires.   5- Record the Details of Salary and Make Deductions Now you need to make a record of the wages paid to the employees and make the required deductions. Inform HMRC about this. Do it before or on payday.   6- Finally Pay What You Owe to HMRC The final step requires paying HMRC. This involves the payment of national insurance and tax that you owe to HMRC.   The Bottom Line Now that you have gathered a fair amount of information about how to run payroll in the UK, we can bring the discussion towards wrapping up. Whether you plan to run the payroll internally or to outsource the services of any accounting firm,  it is important to keep error-free records to avoid any unfavourable circumstances in the future. This will allow a smooth system of paying wages to your employees in a hassle-free manner.   Are you seeking professional help to know how to run payroll in the UK  for a small business? Why not get help from the experts at the CruseBurke? Talk to us now and we will get back to you instantly.    Disclaimer: All the information provided in this …

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register a company for PAYE

When Do I Need to Register as an Employer and How Do I Register?

20/01/2023Accounting , Business , Finance , Payroll & PAYE

When you are in the UK and working as an employer of the company, before you plan to hire employees for your company services, you will have to register with HMRC normally. This is also a requirement even when you are taking the services of subcontractors for your construction work. This turns out to be beneficial if you learn the basics of how to register a company for PAYE. This has become a must-have requirement even when you’re hiring yourself as the director of your limited company. Before payday approaches for the first time in your company, you must ensure that you are registered with HMRC. HMRC normally takes a short period of five days to provide you with the employer PAYE reference number. Moreover, this is imperative to mention here that you will not be able to register your company for two months before paying the employees. In some circumstances, you are bound to pay certain employees even before your company is registered with PAYE. In such a scenario you must try to send the late full payment and inform HMRC about it, run the payroll, and save the detail for the full payment submission. People often make mistakes in this procedure which can cause them penalties. To avoid this kind of unfavourable circumstances, you must gather basic information. This post is based on the required basics about how to register a company for PAYE as an employer, what are the required circumstances to get registered, if is there any timeframe for the procedure, and what you should consider before getting registered.   Reach out to one of our professionals to learn how to register a company for PAYE for your employees in the UK. Get in touch and you will be provided instant professional help!   What are the Circumstances Required to Get Registered as an Employer? When you are connected to any one of the scenarios, you are in a position to get registered with HMRC as an employer: You are giving employee benefits to your employees. The employees are in a position to receive the occupational pension, company pension, or state pension. The employees are working through another job as well. You are giving a salary to your employees which is equal to or more than the National Insurance Lower Earnings Limit (in the tax year 2022-2023 this limit is £123 every week). This could possibly be an amount of £533 a month and £6,396 within the duration of a year. Moreover, if you come under the category of business that is in need of hiring just one employee to share the work burden and let us just say you pay an amount of £9.50 for one hour, you will not be required to get registered for PAYE. This is because of the fact that the employee comes under the category of LEL or below it and you can pay such an employee without following any PAYE scheme.   What is the Timeframe for Getting Registered as an Employer? When you find yourself in a position to get registered as an employer, you must try to get it done before the first payday approaches. There must be plenty of time to initiate the process and try to complete it before it’s high time to do it. This is because of the time duration that HMRC requires to finally complete the process and send you the PAYE reference number. HMRC might require a duration of five days to a week for this. Once you have to pay the employees, there is the compulsion of getting registered for two months as well. If you could not initiate the process in time, you do not need to panic over this matter. The government of the UK has the solution updated on the website to solve the problem of paying employees before you are registered.   What are the Things to Consider Before You Start the Process to Register for PAYE? The possible two ways of sending the employee information and the details of payment to HMRC. This belongs to the running of payroll. You could either do it on paper or you can do it online. However, HMRC suggests using online software to share the information with them. Moreover, there are cases of employers who can still avail the opportunity of sending the information through paperwork to HMRC. There is a criterion for who is actually eligible to use the mode of paperwork. Also, consider the advantages and disadvantages of choosing the right medium to communicate details to them. Once you are clear about choosing your option of sending the information online or through paperwork, there are certain things to consider that are given in the following: Keep your national insurance number with you. You must know the date when you received your payment for the first time. The expected beginning date of PAYE. The number of employees hired. What is the nature of your business? The basic contact details like your email address and your phone number. Your name and personal and office address.   The Bottom Line Now that you have gathered a fair amount of information about how to register a company for PAYE, we can bring the discussion towards wrapping up. When you are carrying out a business in the role of an employer,  it comes with a lot of responsibilities in the UK to be followed. One of such responsibilities is to get registered with HMRC for the PAYE scheme so that you can pay your employees following the rules of this scheme. This is not mandatory in many cases where there is no need of hiring more than one employee or the salary of the employee is below the level of LEL.   Get in touch with our young, clever and tech-driven professionals if you want to choose the best guide for registering a company for PAYE in the UK  for your employees.    Disclaimer: The information about how to register a …

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real time information

What is RTI (Real Time Information)?

04/01/2023Payroll & PAYE , Pension , Personal Tax

When you are an employer of large or small businesses in the UK, there is a mandatory thing to do for you is to inform HMRC about the details of your employees. For this procedure to be successful for beginners, a basic understanding of real-time information is important to learn. In a nutshell, real-time information is a method of reporting the payroll to HMRC in real-time. The method of real-time information is done through an electronic medium by the employers before they make the payments of wages and salaries to their employees. It has been a mandatory part of the business for employers to inform HMRC about the wages details every month. It has become a must part since 2013. Moreover, if the employer makes any mistakes in the submission or the reporting is not done on time, HMRC will charge a hefty amount of fines and penalties. Normally employers will likely require real-time information-enabled software and a good connection to the internet to complete the procedure. This software and connection are used to do the online PAYE filing. There is free software by HMRC that can be used by employers that have less employee count. However, there is commercial software available that is easy for employers to use if they have a large number of employees. We have got you covered with basic information about real-time information. This involves the discussion of what is real-time information, how to ensure your business is a real-time complaint, and what are the penalties in case you fail to file.   Reach out to our smart and clever-minded guys to get your real-time information queries answered quickly. We will help to decide how to deal with your business problems in the UK.   What is Real-Time Information (RTI)? The main purpose of the real-time information is to report the salaries, wages, national insurance, and PAYE to HMRC. Before the business period of 2013, there used to be a form P35 for the purpose of sending details of employees, how much they are getting paid, and how much is being sent to HMRC in form of national insurance and tax. However, after 2013, the methodology changed and now the employers are required to send these details to HMRC before the wages are transferred every month. Moreover, this is also explained by the name that the employers are required to share the information in the actual meaning of real-time before they transfer the wages. Waiting for the tax year end is not practical for the employers as well as HMRC.   How to Ensure that Your Business is RTI Compliant? Do you want to outsource your payroll to specific service providers or accountants? You must ensure before hiring one, how are they going to make your business real-time information compliant? Some of the businesses use the software payroll already. Get into close details of how your accountant or service provider is getting benefits of using the software for this purpose. On the other hand, some businesses are more inclined towards using desktop software. In this scenario, you normally get a software update every now and then. You will have to install the upgraded version and its benefits.  Moreover, some businesses use cloud-based software, and the service provider will be seamless during this method because of the updated technology.   What is the Relation between the Quality of Payroll and Real-Time Information (RTI)? The main purpose of the payroll data is to ensure that the data you provide during the audits are upgraded and accurate as well. Here comes the helping role of real-time information as it helps to record the data and make records of every salary that you transfer to your employees. This information is further submitted to HMRC also. These records must match for a stand accuracy level. In case the records are not being matched, you are being to help to identify the errors and rectify them on time. Before HMRC finds them out and it becomes trouble for you. You might even end up paying a hefty amount in form of fines and penalties.   Penalties and Fines of HMRC in Case of Submission Failure In case a business fails to submit the report on time, there is no escape from the penalties of HMRC. Whether you made errors while doing the process of filing or you failed to do the submission before you paid wages and salaries to your employees in a tax month, be ready to pay extra in such a month. Many of you must be wondering about the number of penalties. Well, this depends on the size of your business that will decide your penalty. The number of employees hired by an employer will also matter in this regard. £100 for the employee count between 1  to 9. £200 for the employee count between 10  to 49. £300 for the employee count between 50  to 249. £400 for an employee count of 250 or more than this.   The Bottom Line Now that you have gathered a fair amount of information about the use of real-time information, we can bring the discussion towards wrapping up. Real-time information is important for all businesses to inform HMRC before the wages and salaries are transferred to the employees. However, the conditions vary for every business type and size. In case you fail to do the procedure on time, you will have to deal with a hefty amount of fines and penalties charged by HMRC. This can put you in serious circumstances. We hope these few minutes of reading will help you to develop a better understanding about what are the benefits of using real-time information for your small business needs.   Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly for small businesses’ real-time information problems. Call us or email us today.   Disclaimer: The general information provided in this blog about the use of real-time information includes …

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PAYE vs umbrella company

PAYE vs Umbrella Company

29/10/2021Business , Finance , Payroll & PAYE

As a contractor, you have two significant options of payroll: PAYE or umbrella company. So, it is essential to make the right decision, whether you are a new or an experienced contractor. That’s why we will focus on PAYE vs umbrella company in this blog. We will provide all the necessary details to you so that you can make an informed decision. So, let’s start!   Are you looking for a professional to help you with employment contracts or understand your responsibilities as a business owner? Then at CruseBurke, we have a team of skilled accountants that provides solutions to all your business problems!   What is an Umbrella Company? The company offers continual employment to those contractors who are on fixed-term contracts.  It acts as an intermediary between the customer and the contractor. With this company, you will stay in employment, when your contract expires, or you’re seeking a new contract.   What is Agency PAYE? With it, a contractor is employed for the period of their contract with their ultimate customers/clients. They are directly paid via an agency’s PAYE. When the PAYE worker’s contract with their customer expires, at that time, their employment ends. The PAYE agencies provide lower rates to their workers, while umbrella companies offer higher rates to their employed contractors.   Tackling payroll by yourself is still daunting? Our payroll team can help you out with this. Contact us now!   The Distinction between an Umbrella Company & an Agency PAYE: The following infographics will show the distinction between them:     PAYE vs Umbrella Company You are required to consider the following factors before deciding whether to get paid via agency PAYE or through an umbrella company. 1) Costs When operating via agency PAYE, there are usually no direct costs. However, in case you opt for the umbrella company, your agency should increase your contracted rate. This is to account for the margin of the umbrella company as well as employment costs. Make sure you have enough knowledge of what is included in this rate in order to compare providers correctly.  2) Expenses You are hired and paid via PAYE, with both an agency PAYE or an umbrella company. There are no tax returns. However, you can claim tax reliefs on the allowable costs with an umbrella company. When you ask to see whether you are eligible, good umbrella companies will discuss this with you. In case you are, then your tax liability will be reduced. 3) Insurance You will need insurance regardless of who your employer is. To enable you to do your work, good umbrella companies and agencies will provide any necessary cover. Additional coverage, such as life insurance, health insurance, and accident insurance, can be provided at no additional expense by an umbrella company.   Quick Sum Up We hope with the above-mentioned PAYE vs Umbrella company difference, you can make a more informed decision on whether to get paid through an Umbrella Company or an agency PAYE. However, if you still can’t make the decision, then we recommend you consult an expert for this!   Allow us to help you make the right decision in order to choose the best option of payroll as per your circumstances! We will resolve all your business problems at a reasonable rate! Reach out to us now!   Disclaimer: This article provides general information on PAYE vs umbrella company.

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Self-employed and employed

Can I be Self-Employed and Employed at the Same Time?

18/10/2021Payroll & PAYE , Sole Trader , Taxation

If you’re looking for a way to increase your income while still working full-time, you might be thinking if you can be self-employed and employed at the same time. The short answer is a resounding yes! If you’ve already had a full-time job while running your own business, you’re probably aware of the liabilities that come with it. Therefore, if you have never been through this situation, then read this blog till the end! We will inform you about its advantages, the tax to pay with, and its further details. So, let’s start!   Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package!    Can I be Self-employed and Employed at the Same Time? Yes, you can. For instance, you work for an employer/company throughout the day, but in the evenings or at night, you work for your own business. When you run your own business and are solely responsible for its success or failure, you are considered self-employed. On the other hand, you are an employee or employed when you work for an employer on their own payroll and you are paid through it. If you fall under both categories, you are both self-employed and employed at the same time. The money you earn from your job will be taxed under Pay As You Earn, and you’ll need to file a Self-Assessment Tax Return to declare the income you made from your own business.   Advantages of Being Self-employed and Employed The advantages are valuable, although they are simple. One of the main reasons is taxation. Several employment ways and forms of income are taxed differently. So, by taking advantage of your possibilities, you can save your money.  Moreover, having your own business while working for someone else can be a great source of prosperity and mental satisfaction that you will not find anywhere else.   How Does Tax Work If You are Self-employed and Employed? The income tax and NI (national insurance) implications can be complicated in case you are self-employed and working for another employer at the same time or are changing from self-employed to employed or vice versa.  You have to inform HM Revenue & Customs immediately as you become self-employed even if you are also working for someone else at the same time or you have already completed a tax return every tax year. You should not inform them late (when filing a tax return).    We can register you as self-employed to HMRC on your behalf!  Fill out this form and let us handle everything!    After registering, every year, you will be required to complete a tax return. You will enter your self-employment earnings as well as any allowable expenditure incurred details in the tax return. This will permit HMRC to calculate the amount of your income tax and NI you must pay. If you have file your tax return you must pay the tax amount at the end of the tax year.    Am I Exempt from PAYE If I’m Self-Employed You are exempt from PAYE if the following case applies to you: You are doing business for yourself and are liable for its success and failure and you can make a profit or a loss of your business. You can control what work you do, when, how, and where you do it. You can outsource the work to anybody else. Your employer agrees to a fixed commission for your work. You utilise your amount of money to purchase business things, cover operating expenses, and provide equipment and tools for your own work or the work of the employees you hire. In case you are a self-employed person, you must fill self-assessment tax return form once every year. Also, you have to pay HM Revenue & Customs twice a year ( in January and July). In some cases, you can pay just via PAYE. It means that your taxes will be automatically paid through it and there will be no risk of not meeting a deadline.  To use PAYE, You must submit your tax return by October, 31st (manually). You can also submit it online by December, 30th. HM Revenue & Customs will collect the money automatically you owe via PAYE, in case you meet the conditions mentioned above; otherwise, pay through instalments.   Unable to calculate your employed and self-employed tax? Let us handle this!   What is a Self-Assessment Tax Return? If you are self-employed and do not pay income tax through Pay As You Earn, you must register for Self-Assessment. After the end of a tax year (5 April), self-employed businesses and individuals must file a Self-Assessment tax return to record their earnings. To fill out and submit your returns, you only need to keep track of your receipts and bank statements. HM Revenue & Customs will assess what you have to pay on the information you’ve provided. By the 31st of January, you have to pay your Self-Assessment bill. In addition, the amount of tax you are required to pay is based on your income tax band. You have to send a self-assessment tax return in case: You’re self-employed with a profit of over £1,000 You are a partner in a partnership Remember that submitting your tax return up to three months late will result in a £100 penalty. You will pay more if it is late for more than three months.    Final Thoughts To summarise the discussion, we can say that you can be self-employed and employed at the same time, which has many simple but valuable advantages. However, you should be aware, that there are tax implications with this. PAYE is a system that deducts income tax and NICs from employees. But as a self-employed, you must pay tax and NI through Self-Assessment.    Turn to us if you need any help with accounting, tax payroll, and other finance-related problems! We will solve you are all …

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how to claim overpaid tax

A Guide Based on How to Claim Overpaid Tax from HMRC?

06/10/2021Payroll & PAYE , Personal Tax , Tax Issues

If you are looking for a significant source to know about how to claim overpaid tax from HMRC, then you just have found the right post. First, we will see the P800 tax calculation process of HM Revenue & Customs. This means that HMRC will automatically issue any tax repayment; you don’t have to claim it. But, you will need to make a claim in case you have overpaid tax and did not receive a P800 tax calculation from HMRC. Continue reading this blog to know more about how to claim overpaid tax from HMRC.   Turn to CruseBurke for managing and recording finances and for claiming overpaid taxes! We have a team of skilled accountants who will handle everything with HMRC on your behalf. Contact us right away!   When can I overpay on Employment Income & Pension Income? If you get a pension income or employment income and pay your tax via PAYE, you might overpay tax. You can pay too much tax on employment income if: Your employer was utilising the incorrect tax code. At the same time, you have more than one job. Other income which HMRC taxes through your tax code has decreased. Your situations changed; for instance, you switched from part-time to full-time work. You have a new job, and for a time, you had an emergency tax code. You are a pupil who works during off days. You ceased working and had no taxable income or benefits for the remaining year. For a portion of the tax year, you have worked. You can overpay tax on pension income if: Your taxable income has decreased; You had more than one pension (more than 1 source of PAYE income). You overpaid tax on a total pension sum. Your pension provider was utilising the incorrect tax code; Your tax code contains the incorrect amount of state pension.   What is a P800 Tax Calculation? The HMRC will get details about your total received income, amount of tax paid, and the value of received benefits-in-kind within the tax year from your employer or pension provider. With the help of this information, HMRC will automatically carry out a reconciliation in order to calculate you have paid the correct amount of tax. You will receive a P800 tax calculation by HMRC if they think you have not paid the correct amount of tax. Therefore, you have to check this calculation carefully because HMRC can have fewer or incorrect details to work out your tax accurately. In case HMRC thinks you have paid the extra tax, they will automatically issue you a tax repayment; you don’t need to claim it. And, if HMRC thinks you have not paid a sufficient amount of tax, they will write to you which explains how you can repay tax to them.    How to Claim Overpaid Tax from HMRC for the Current Tax Year? You have to inform HMRC why you think you have overpaid tax before the end of the tax year. You have to tell only if you have paid too much tax through the Pay As You Earn (PAYE) system. You can call HMRC directly to inform them. You have to gather the following details before calling HMRC:  Your name, job, address, and NI (National Insurance) number. For the current tax year, estimation of your income and pensions from every source. Your employer or pension provider details such as PAYE scheme reference number displayed on your payslip, or ask them for it. For future reference, do ensure you have kept a record of the following: Advisor name you spoke to Time and date of the phone call Communication between you and the advisor In order to support your claim, you may have to send some more details. HMRC will let you know about those details if needed. After processing your claim, HMRC will issue you a new tax code. It means if there is any refund, it will be added to your pension or wages, and you will automatically get the amount through the payroll. This will result in a tax refund or lower tax deduction through PAYE. You might have to claim a repayment directly from HM Revenue & Customs. This is when the refund is due towards the end of the tax year, and you have already received your final salary.   Unable to claim your overpaid tax? Let us handle this!   Conclusion We hope now you have understood how to claim overpaid tax for the current year. You will have to provide those above-mentioned details and extra details in order to support your claim. Therefore, you should keep a record of your income and paid taxes properly. And, we will recommend you to take help from a professional for recording your finances and claiming repayments.   Reduce your business burden by letting us manage & record your finances! Our team could help you claim what is rightfully yours! So, Contact us now!   Disclaimer: This article intends to provide general information on how to claim overpaid tax.

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Payroll and Paye

Payroll and PAYE – A Complete Guide For First Time Employers

30/08/2021Payroll & PAYE , Personal Tax , Tax Issues

Payroll could be complicated for numerous foreign managers and companies that need to perform business transactions within the UK. So, in case you’ve got come to the point of setting up a payroll site and the thought of running PAYE fills you with fear, or you feel that you don’t know enough to make things right, then no need to worry as this straightforward blog will help you understand things better! This blog is based on the following essential steps to get the payroll site done effectively. Enrol as an employer with HM Revenue & Customs Get yourself registered for PAYE Collect Workers details Utilise payroll site So let’s explore the details   1. Enrol as a Business Owner with HMRC First of all, make sure that whether you wish to enrol as a business owner. Ordinarily, you’ll have to do so if you are going to recruit your first employee or utilise subcontractors for development work. Moreover, you’ll have to be enlisted as a business owner if you’ve set up a local company and planned to pay yourself income as a director. Use this form to enrol as a proprietor. After becoming a business owner for the first time, you need to understand your legal obligations towards your employees. As a business owner, the charge and work obligations you have for your staff will depend on the contract you provide them and their employment status. HM Resource & Customs have delivered a checklist for first-time business owners, which we suggest you read.    Are you looking for a professional to help you with employment contracts or understand your responsibilities as a business owner? Then at CruseBurke, we have a team of skilled accountants that provides solutions to all your business problems!   2. Get yourself Registered with PAYE After registering and receiving your confirmation letter as a business owner by HMRC, you have to register online to pay taxes and NICs. This concept is termed PAYE.   3. Collect Workers details Make sure you collect all the necessary details from your new workers. You’ll require: Full name, DOB Start date National insurance number Home address Affirmation of whether they have other employments or a Student loan HMRC have made the data collection process simple as you’ll ask your new worker to fill within the online HMRC starter form. Before giving you all the required information, the newly hired employee will completes the starter form online, prints it out and sign it.   4. Utilise payroll site The whole process will be automated with the help of a cloud-based payroll site. It will reduce your essential time and stress by taking care of tax calculations, NICs, your business stipend (if you’re entitled to one) and by producing payroll slips for workers. In addition, it will automatically generate your Real Time Information (RTI) reports submitting it to HM Revenue & Customs and reduces your burden by producing payslips for workers.   Final Thoughts Famous software like QuickBooks, Sage and Zero provides you packages that include payroll sites with support. If you utilise one of these accounting software, it’ll make the payroll process easier for you.   Tackling payroll by yourself is still daunting? Our payroll team can help you out with this. We are a team of professionals that offer training and support to help you get your payroll system up and running. So reach us now to save your time and grow your business like never before!

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Furlough vs Layoff

Furlough vs Layoff: Explaining the Difference

03/06/2021Covid -19 , Payroll & PAYE

Coronavirus pandemic has adversely affected the business industry by reducing the resources of the business owners. Consequently, business owners are contemplating for employees’ furlough or lay off. Let’s kick off with the difference between Furlough vs Layoff.   Furlough vs Layoff- Differences   Due to a great downfall of the world’s economy whilst the Covid-19 pandemic, we have seen an awful decline in business activities. As a result, many businesses are shut off, and those who’re operating are with the least number of employees. In such a situation, as a business owner, you might wonder to furlough or lay off your staff. A furlough is a forced, unpaid leave, hour reduction that is done by the business temporarily. The employer does furlough to reduce the cost of their payroll when a business faced financial trouble or an economic downturn. A furlough can be a layoff, but in layoff employees are not retained. On the contrary, Layoff is the permanent or temporary termination of the employees. Though there is a possibility for the rehiring but generally a layoff is considered a permanent separation. We can call furlough as a pause, whereas layoff is the permanent termination. Want someone to manage your payroll to reduce your extra costs? Contact us right away! Wondering which might be the best for you during the ongoing pandemic? Let’s dive deeper into the difference between Furlough vs Layoff to know which one is the best. The major difference includes:   1) Time limit   A furlough is a temporary absence or leaves of employees that the employer provides for a short time. On the other hand, in layoff, the employer can terminate the employees on a temporary or permanent basis. The time limit of furlough is addressed by the employer but a layoff can be for an indefinite period. In furlough, the employer might not cut pay for a continuous period, rather it can be a temporary pause of hours in a day or a week in a month. An employer who wants a permanent dismissal of his employees would go for layoff rather than furlough.   2) Employee’s Benefits   If a business is furloughed, an employer might pay the paid time off benefits to its employees.  Here, the employees might also receive health insurance, etc. Contrarily, benefits like health insurance and time-off benefits might not be given to the layoff employees. However, it may vary based on the state payout laws.   3) Employer’s Duties   In furlough, the employer stays in touch with the employees and let them know if he wants to extend the furlough’s period. On contrary, if an employer goes for a layoff his responsibilities increase as he’d need to pay the termination payments that are generally given at the time of employees’ termination.   4) Return to Work   In furlough, the employees return to work after the furlough ends. Contrarily, layoff employees are replaced and rehired by the employer. In furlough, employees might search for other jobs but most of them don’t as they are aware that it’s a temporarily leave. Opposingly, in a layoff, the employees search for new jobs and get hired there. Get premium accounting and taxation services with CruseBurke. Talk to our accountants to know how we can flourish your small business!   What should I do during the Coronavirus Pandemic?   You should do the relevant changes to your staff based on your business conditions. During the Covid outbreak, it is reported that almost 50% of small business have gone for layoff. We recommend you furlough your business if your business is viable enough to face the hard days during the pandemic. So that you’d revive your business activities after the hard times. Furloughing helps you to: Avoid layoff Reduce your business cost Avoid termination pay Immediate restart your business If your business is permanently closed due to the pandemic. Laying off would be the better option to save your finances. In future, if there is a need you can rehire them for your business.   Quick Sum Up   As a small business or medium-sized business owner, you need to figure out the impacts and implications of the coronavirus pandemic on your business. While choosing between furlough vs layoff, consider the impacts each will be leaving on your business. If you are unable to select between the one, contact our business accountants for in-depth advice! Don’t hesitate to get in touch with us, we’ll get back to you in the fastest possible time.   Disclaimer: This blog is intended for general information about furlough vs layoff.

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Time to pay

Here’s All you Need to Know About HMRC Time to Pay Scheme 

02/02/2021Payroll & PAYE , Tax Issues

The Corona Virus Support Package allowed many people to defer payments of July 2020 income tax payments. They were supposed to pay these instalments by 31st January 2021. As of now, HMRC understands that due to the current economic situation, so many people are still holding off on the payments that would have been due on 31st January 2021. These include: The balancing income tax payment for 2019/20, The first income tax payment on account for 2020/21, Any capital gains tax for 2019/20 and Classes 2 and 4 NIC for 2019/20. HMRC has identified another method. This is applicable for further deferment. This one is called the ‘time to pay’ arrangements facility and can be availed online. Taxpayers that find it hard to pay on time may end up discussing their payment plans with HMRC representatives. This online system makes the whole process ten times easier. The taxpayer needs to pay a government gateway account. They need to pay the tax in monthly instalments by direct debit. This is done to stay clear of direct debit within 12 months. Take a look at other conditions of the time-to-pay scheme: You must have paid the 2019/2020 tax return. If you’ve made any submissions, all the records must be up to date. The range of debt must be at least £32 but less than £30,000. Make sure there are no other instalment plans in place. The good news is: the system is flexible too. Under normal circumstances, you’re required to pay on a monthly basis. It’s totally up to the taxpayer to make additional payments too as per their liking if the circumstances are favourable for them. If you’re starting out on the instalment plan, make sure it’s done no later than 60 days after the due date of the tax. Realistically, it needs to be in place by 31st March 2021. In case, you’re late, an interest of 2.6% will be applied to the full date of repayment. The facility may be a lifeline for many but it should be noted that care needs to be taken should the application include deferment of Class 2 NIC due for 2019/20. The rules covering NIC payments mean that if this NIC is not paid by 31 January 2021, then the year will not count as a completed year in the taxpayer’s NIC record for state pension purposes.

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