From maternity leave and sick pay to jury service and official documentation such as P60 and P45 forms, there’s more to getting your payroll right than simply paying wages and deducting the right amount of tax.
This blog post covers:
- Operating a PAYE system
- Pay slips
- New employees: P45 forms
- When your employee leaves: P45 forms
- When your employee leaves: final payslips
- P60 forms
- Help with statutory payments
- Jury service
- Making deductions
- How to get it right: accountants and payroll software
- National Minimum Wage
You must carry out certain tasks each month when operating a PAYE system. Use your salon software to:
• Record your employees’ pay.
• Calculate deductions such as tax and National Insurance.
• Calculate your employer’s National Insurance contribution.
• Produce payslips for each employee.
• Report your employees’ pay and deductions to HMRC.
You must also send HMRC an annual payroll report on or before your employees’ final payday in the tax year (which ends 5 April).
Your salon or barbershop employees are entitled to itemised payslips.
The law says that all itemised payslips must include:
• the total number of paid hours; or
• a breakdown of hours paid for different types of work and/or at different rates of pay.
This is in addition to information such as gross salary, salary after tax, tax, National Insurance contributions and any other deductions.
NHBF Members benefit from a free 24/7 legal helpline to help with employment issues. Find out more:
You must tell HMRC when you take on a new employee and be registered as an employer.
You will usually have to pay them through PAYE if they earn £118 or more a week (£512 a month, or £6,136 a year).
Use their P45 to work out their tax code and set them up on your payroll.
You must tell HMRC when one of your employees leaves or retires and give your employee a P45.
If your employee is leaving, their final payslip may look different to their usual payslip. This is because it may include items such as:
• Holiday pay – you must pay for any annual leave owed to your employee.
• Any redundancy pay if the employee was made redundant.
Make sure your employee’s payslip is clearly itemised and that they understand how everything has been calculated.
You must give your employees a P60 if they are working for you on the last day of the tax year (5 April). The P60 will summarise their total pay and deductions for the year.
Statutory Maternity/Paternity/Adoption/Shared Parental Pay
Employers can usually claim back 92% of Statutory Maternity/Paternity/Adoption/Shared Parental Pay. If you qualify for Small Employers’ Relief, you can claim back 103%.
If you cannot afford to pay Statutory Maternity/Paternity/Adoption/Shared Parental Pay to your employee, you can apply to HMRC for advance payments. You can apply up to four weeks before you need the first payment.
Our in-depth guide to pregnancy and parenting is available for download to NHBF Members only.
Anyone aged 18-70 who is on the electoral register can be called to do jury service.
You must allow an employee time off to do jury service.
You can choose to continue to pay your employee as normal while they are on jury service, but you are not legally obliged to do so.
If you do not pay their wages, your employee can claim certain costs from the court.
There are a number of deductions you will need to make from your employees’ wages. These include:
• National Insurance.
• Pension contributions.
• Student loan repayments.
• Payroll giving donations.
• Child maintenance payments.
As an employer, the law says you must provide a workplace pension scheme. Find out more in our blog post.
Using an accountant
Using an accountant will free up your time and give you peace of mind. Using a reputable accountant can save you thousands of pounds in the long run. Read our blog post to find out more about how to choose an accountant.
To run your payroll scheme you must either:
• use payroll software; or
• enrol for PAYE online.
Don't forget: strict GDPR rules apply to protecting your employees’ personal data. Find out how to stay within the law: download our detailed Members-only guide to GDPR and GDPR toolkit which includes templates to help you comply with GDPR.
Don’t forget: your employees must be paid the National Minimum Wage (NMW) or National Living Wage (if over the age of 25), and apprentices must be paid the correct apprenticeship rate.
Our free expert guide to the NMW and NLW is available to NHBF Members only.
• You must carry out certain monthly and annual tasks when operating a PAYE system.
• Your employees must be given clearly itemised payslips.
• A final payslip may be different to your employee’s usual payslip – make sure they understand the details.
• You will usually have to pay your employees via PAYE if they earn more than £118 a week.
• Use a new employee’s P45 or use the government’s starter checklist to find how much tax they should be paying.
• You can get help with certain statutory payments such as maternity leave.
• Your employee must be allowed to do jury service, but you are not legally obliged to pay them. They can claim certain costs from the court.
• You will need to make deductions from your employees’ wages including tax, National Insurance and student loans.
• Consider using payroll software and/or accountancy services to make your life easier.
• You must pay your employees the correct National Minimum Wage, National Living Wage or apprenticeship rate.