Payroll & PAYE Archives

News,May 2018

How to Read a Payslip?

Mia Hamilton30/03/2025Payroll & PAYE

Understanding how to read a payslip enables employees to check their correct pay amount. Anyone who gets their first payslip or has been working for many years needs to understand the process which determines their salary amount. The main elements on your payslip will display your payroll number together with gross pay, net pay and tax code information. In this article, you will clearly understand the basics when it comes to how to read a payslip. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about how to read a payslip. Understanding Your Payslip: A Step-by-Step Guide Every worker receives their payslip through paper or electronic means during salary distribution time. Every employer must deliver this essential documentation to their employees according to legal requirements which serves as the main document to confirm wages and deductions. Interpretation of your payslip requires proper breaking down of its essential components. Organisation details and employee information about salary amount combined with tax and contribution costs represent the key elements that build up the payslip. However, an advantageous understanding of pay details will arise when you examine each segment in detail to validate your earnings and identify deduction effects. Following are some key points that help you to understand the basics of Payslips and how to read payslips. Your Personal Information: Includes your name and sometimes your home address. Some organisations use Payroll Numbers to identify their staff members with a specific unique code. Your bank account will receive salary payment on this specific date. Tax Period shows which month the pay slip applies to (a value of 01 indicates the tax period is April and 12 stands for the March period in monthly pay). The Tax Code originates from HMRC to calculate taxable pay before the deductions. A personal identification number called National Insurance Number serves as the basis for social security levy payments. Hourly pay and overtime rates as well as bonuses and payments constitute the wages prior to payroll deductions. The section demonstrates reimbursed expenses managed through payroll that might appear separately or within taxable/non-taxable categories. The page displays adjustable deductions which consist of both income tax and National Insurance contributions. Pension Contributions: Displays payments towards a workplace pension, including employer contributions if applicable. Deductions from student loans occur here when the repayment period starts after graduation according to selected plans. The statement includes deductions for fines together with debts and child support payments when specified by court orders. Sick Pay: Displays Statutory Sick Pay and any additional company sick pay, with deductions for tax and NI. Employment benefits include payments that staff receive during birth-related absences such as maternity paternity and adoption. The workplace provides employees with benefits consisting of medical insurance together with company vehicles as well as travel ticket funding and cycling assistance programs. Other Deductions: Shows deductions such as trade union subscriptions. The year-to-date summary presents total amounts regarding earnings and tax and NI contributions and student loans and pension contributions running from 6 April to 5 April (financial year). Individuals obtain Net Pay through all deductions made from pay during the month. Employers may include extra details through important messages in this section. Identifying the Key Sections of a Payslip A payslip follows a logical arrangement, which people read in sequential order, moving down the page. Here are some key sections that guide you when your concern is how to read a payslip. Section 1: Identification of the parties A payslip displays vital information about parties involved in the employment agreement in its opening section. The initial section functions as an uncomplicated recognition system that matches the payroll document with its intended employee and company. Section 2: Understanding the Gross Salary The gross salary stands as the second foundational part of a payslip because it showcases the complete earnings an employee will receive prior to salary deductions. The total earnings consist of contract-defined terms plus any relevant additional benefits. Payment at the gross level consists of basic salary and any additional payments that are paid to employees during the pay period. These include: The seniority bonus functions as an extra payment that depends on employee tenure length. Experienced workers receive single-time recognition through exceptional bonuses which celebrate their exceptional achievements or superior performance. Compensation for taken holiday days includes payments provided during the pay period. The workplace provides additional pay through higher rates to employees who perform overtime or on-call shifts. The company provides employees with several advantages such as work equipment along with a company driver benefits package. The gross salary works as the foundation pay because each employee needs to understand the base amount from which deductions will be taken before social security and employer contributions. Section 3: Taxes and Social Security Contributions The monthly gross salary does not amount to the total monthly payment an employee receives because various deductions are made. The deducted money mainly pays for social security contributions that will enable future access to both medical care and pension benefits. Employee Social Security Contributions (12.45%): Employee contributions from gross salary support sickness fund care (2.80%) sickness fund cash benefits (0.25%) pension fund (8%) and long-term care insurance (1.4%). Employer Social Security Contributions (12.73%–14.89%): Weekly remittances from employers include both employee-contributed social security deductions together with employer contributions which derive from employee pay levels. Employers pay the entire span of social security contributions that vary between 12.73% and 14.89% without any deductions made from employee pay. The remaining amount of salary becomes taxable after all social security removals have been calculated. These payments stay untaxed because the system does not deduct them from any salary. Expense reimbursements – Compensation for work-related costs. The reimbursement of commuting expenses through transport allowances forms part of employee reimbursements. So, employees can determine their received pay by understanding the various deductions since it reveals their net salary. Section 4: Understanding Net Pay The final part of understanding a payslip involves looking at net pay which represents the …

What is PSA(PAYE Scheme Agreement) Tax?

Mia Hamilton17/03/2025Payroll & PAYE , tax

Businesses simplify their tax responsibilities by a complete understanding of this most askable question: what is PSA tax? In this article, you will not only understand what PSA tax is but also go through how to apply for PSA tax and report PSA tax through online or postal methods. Further, it also provides basic information if you want to change or cancel your PSA tax. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about the PSA tax. What is PSA Tax? The PAYE Settlement Agreement (PSA) enables businesses to submit one annual payment that satisfies the tax and National Insurance Contributions (NICs) obligations regarding employee benefits and expenses. Minor irregular receipts, along with impractical expenses and small payments, fall under this agreement. The implementation of a PSA allows organisations to forego payroll processing of specified expenses and end-of-year reporting requirements such as P11Ds as well as Class 1A National Insurance until tax year completion. The National Insurance payments will be handled as Class 1B by employers who participate in a PSA. Tax reporting becomes easier through the implementation of this system and so do administrative procedures. Certain employee expenses fall under exemptions that allow these expenses to remain unreported during the tax year conclusion. Company employers must comprehend the expenses approved under PSA to meet HMRC rules successfully while also staying protected from regulatory noncompliance penalties. What Can Be Included in a PSA? Expenditures and benefits qualify under the PAYE Settlement Agreement (PSA) when they are small in nature, occur irregularly or when payroll processing proves impractical. An agreement allows employers to cover particular benefits for employees that include entertainment costs with minor awards in addition to travel expenses. Minor expenses refer to small performance awards as well as business-related incentives. The list of included benefits under a PAYE Settlement Agreement includes long-service awards together with telephone expenses, small presents or vouchers alongside employee event tickets, and miscellaneous costs from business travel that surpass the designated daily spending limit. The rules of PSA exclude all items designated as trivial benefits. Irregular expenses represent employee benefits, which both employees and employers lacked explicit contractual agreements to receive. Three types of irregular benefits consist of relocation expenses exceeding £8,000 as well as expenses for both overseas conferences and spouse travel abroad and company holiday flat usage. Employees receive impracticable expenses as benefits that cannot be easily valued or distributed among staff members. The common types of impracticable expenses include non-exempt staff entertainment as well as shared company cars and personal care expenses that include hairdressing. A PSA excludes direct payments and wage reimbursement and does not apply to valuable company benefits and salary payments. Workplace bonuses, together with lump-sum allowances and beneficial loans, fail to qualify for inclusion under the PSA. Additional limits may arise whenever an employer makes a PSA request after beginning their tax year. Compliance regulations together with employee benefits management, become clearer through the understanding of these guidelines for businesses. Applying for a PAYE Settlement Agreement (PSA) Employers need to submit their PAYE Settlement Agreement application either through the online system or by sending paperwork through the mail. An employer may request an agent to file an application as their representative. To initiate an application without established authority permission, employers must obtain a signed authorisation letter from the agent. Employers looking for assistance regarding PSA acquisition or calculation need to reach out to the HMRC employer helpline for support. The process allows reporting entities to fulfil their tax requirements correctly, which helps prevent errors when it comes to expense reporting and benefit declaration. How to Apply for a PAYE Settlement Agreement (PSA)? The PSA application process is available through both online platforms and postal services. Apply Online They need their employer’s PAYE reference (123/AB456), consisting of three numbers followed by a slash and letters and numbers, to apply through the online system. The PAYE reference information appears in correspondence from HMRC regarding PAYE functions. Employers need to provide their business name along with address, phone number, and email, but only when they opt for a Government Gateway sign-in. The review process at HMRC takes place after an employer applies for the PSA, through which HMRC may reach out if the request presents any problems. The employer gets approval by email, followed by the receipt of the PSA document through postal delivery. Apply by Post Applying for PSA certification through postal mail requires employers to write a letter at BX9 2AN to HMRC Business Tax and Customs for approval on desired expenses and benefits inclusion. The request evaluation process by HMRC produces two draft copies of form P626 before sending them to the employer. Attention must be paid by both employers in physically signing and resenting every document, which will result in HMRC sending the official final PSA document. Reporting Your PAYE Settlement Agreement (PSA) to HMRC You need to submit the online form to HMRC after obtaining your PSA to report your tax due each tax year. Failing to submit your liabilities to HMRC will result in their assessment and potentially lead to an increased expense. All expenses or benefits that cannot fit into the PSA must be reported independently through Form P11D. After processing payments through payroll, you can bypass submitting a P11D form. Moreover, the PSA function continues until both you and HMRC decide to cancel it or until necessary adjustments need to be made. An employment bond requires renewal only if you plan to update its conditions during tax year upkeep. Deadlines and Payment for PAYE Settlement Agreement (PSA) A PSA application deadline occurs on 5 July, after the tax year initiates its first employment period. The tax year’s consequences become enforceable on 5 July of the following year, according to the example of 2023–2024. The tax and National Insurance payments under the PSA become due by October 22 after the relevant tax year yet October 19 serves as the postal deadline. Payments made after …

Everything You Need to Know About Wages Control Account

Mia Hamilton28/05/2024Accounting , Finance , Payroll & PAYE

As a business owner or accountant, managing employee wages, salaries, and related expenses can be a complex and time-consuming task. With the ever-changing landscape of tax laws and regulations, it’s essential to have a clear and accurate understanding of your payroll management. A vital tool wages control account is designed to help businesses in the UK streamline their payroll processes. This is to ensure compliance with tax laws and make informed financial decisions. In this discussion, we’ll delve into the world of Wages Control Accounts. Exploring what they are, how they work, and why they’re crucial for businesses of all sizes. We’ll also examine the importance of gross pay, necessary deductions, and accurate payroll management. This will help to know how the Wages Control Account can help you stay on top of your finances. This blog will help you to provide you with the knowledge and tools you need to master your payroll management and take your business to the next level. So, let’s get started and discover the benefits of the Wages Control Account for yourself. Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly to the reporting in the UK. Contact us now. What is a Wages Control Account? A Wages Control Account is a crucial accounting tool used in the UK to manage and track employee wages, salaries, and related expenses. It’s a specific type of ledger account that helps businesses accurately record, classify, and report on payroll transactions. Purpose of a Wages Control Account The primary purpose of a Wages Control Account is to: Record and classify wages and salaries paid to employees Track payroll-related expenses, such as taxes and benefits Provide accurate financial information for accounting and tax purposes Assist in preparing payroll reports and statements How a Wages Control Account Works? Here’s how it works: All payroll transactions, including wages, salaries, taxes, and benefits, are recorded in the Wages Control Account The account is debited for gross wages and salaries paid to employees Payroll taxes and benefits are also debited from the account The account is credited for any deductions or refunds Benefits of a Wages Control Account Using a Wages Control Account offers several benefits, including: Accurate financial recording and reporting Simplified payroll management Easy tracking of payroll expenses Improved compliance with tax laws and regulations Enhanced financial decision-making What are the Necessary Deductions of Wages in Accounting? Necessary deductions from wages refer to the amounts withheld from an employee’s gross pay to comply with UK tax laws and regulations. These deductions are mandatory and crucial for accounting purposes. This is to ensure that employees contribute to the country’s tax system and national insurance fund. Types of Necessary Deductions The following are the necessary deductions from wages in the UK: Income Tax: Deducted based on the employee’s tax code and gross pay, with the amount depending on their income tax band. National Insurance Contributions (NICs): Deducted from employees’ wages to fund social security benefits, including state pensions and jobseeker’s allowance. Student Loan Repayments: Deducted from employees’ wages to repay student loans, if applicable. Court Orders and Attachments: Deducted for court-ordered payments, such as child maintenance or debt repayment. Pension Contributions: Deducted for employee pension schemes, including auto-enrolment pensions. Necessary deductions are crucial for: Complying with UK tax laws and regulations Contributing to the national insurance fund and social security benefits Ensuring employees meet their tax obligations Accurate accounting and financial reporting Maintaining a healthy financial position for businesses Gross pay Gross pay refers to the total amount of money earned by an employee before any deductions or withholdings. It is the foundation for calculating necessary deductions. These deductions are typically calculated as a percentage of gross pay. For example: 1- Income tax is deducted based on the employee’s tax code and gross pay, with the amount depending on their income tax band. 2- National insurance contributions are calculated as a percentage of gross pay. This is with employees contributing a certain percentage of their earnings between the primary threshold and upper earnings limit. 3- Pension contributions, such as auto-enrolment pensions, are also calculated based on gross pay. Importance of Gross Pay Deductions Gross pay cuts refer to the reduction of an employee’s total earnings before taxes and other deductions. This means that the decrease in pay affects the employee’s entire salary. Including their take-home pay and the amount used to calculate taxes and benefits. Impact on Take-Home Pay Gross pay cuts have a direct impact on an employee’s take-home pay, as it reduces the amount of money they receive in their paycheck. This can lead to financial difficulties for employees who rely on their full salary to meet their living expenses. Effect on Tax Calculations Gross pay cuts also affect tax calculations, as the reduced salary is used to determine income tax deductions. This means that employees may see a decrease in their tax liability. But it’s essential to note that this reduction is a result of a lower salary, not an increase in take-home pay. Influence on Benefits and Contributions Gross pay cuts can also impact benefits and contributions, such as pension schemes, life insurance, and health insurance. As the salary decreases, the amount contributed to these benefits may also decrease, potentially affecting the employee’s future financial security. Significance in Payroll Management Gross pay cuts play a crucial role in payroll management, as they require accurate calculations and adjustments to ensure correct deductions and benefits. Employers must carefully manage these changes to avoid errors and ensure compliance with tax laws and regulations. Gross pay cuts are closely related to necessary deductions. As they affect the amount of money available for deductions like income tax, national insurance contributions, and pension contributions. When gross pay decreases, the amount available for deductions also decreases, potentially impacting the employee’s financial obligations and benefits. The Bottom Line In conclusion, the …

A Guide About How to Run Payroll in UK!

Mia Hamilton24/01/2023Payroll & 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 …

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

Mia Hamilton20/01/2023Accounting , 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 …

What is RTI (Real Time Information)?

Mia Hamilton04/01/2023Payroll & 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 …

PAYE vs Umbrella Company

George29/10/2021Business , 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.

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

George18/10/2021Payroll & 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 …

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

George06/10/2021Payroll & 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.

Payroll and PAYE – A Complete Guide For First Time Employers

George30/08/2021Payroll & 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!