Whether your payroll service is weekly, fortnightly or monthly it isn’t a simple process of just transferring money from one account to another. There are a number of regulations that need to be taken into account, such as PAYE, NIC, Statutory Sick Pay, Statutory Maternity Pay, Student Loans and Working Family Credits.
PAYE
PAYE is a payroll service, the phrase stands for pay as you earn. This works by deductions made by the employer to the employees wage for income tax, national insurance and student loans. These payments are to keen in line with procedures put in place by HM Revenue & Customs (HMRC)
It the responsibility of the employer to pay the relevant tax and NIC each and every month the employee is paid.
NIC is a system were workers pay in a certain amount to receive state benefits. The amount you pay varies on a number of different aspects. Each worker is categorised into a letter group. This is dictated by the workers situation for example M is for workers under the age of 21. This letter is then matched up to how much the workers earns. This generates a percentage that must be deducted from the wage. Income tax works in a similar way to this.
Other aspect to consider when paying wages is student loans. A large majority of people are going to university now and this usual involves a loan. This is repaid on monthly biases, depending on earnings and the starting date of the course. As an example all students who went to university after 2012 will pay back 9% of their earnings over 21,000 a year. However those who went you university before this date will back 9% of earnings over £17,495.
These regulations are never a simple process to calculate. When there is more than one employee’s who need paying the process can become a difficult task. This is why so many businesses are now out sourcing their payroll services. This saves time, and makes the whole process smoother and less stressful for the employer.
Companies such as D.E. Ball, located in Shropshire, provide this service on a weekly or monthly basis for the flexibility of the employer. They are deal with all of the regulations removing the monthly stress.