Registering a UK payroll scheme for overseas companies
To have a UK payroll scheme for overseas companies, you need to register as an employer with HM Revenue and Customs. A payroll can be run monthly, which is usual in the UK, or weekly.
As part of running a payroll scheme you are responsible for collecting payroll taxes (PAYE and National Insurance) from your employees’ salaries.
Rates of PAYE and National Insurance change regularly. Other deductions that can be collected through payroll, if applicable, are Student Loan repayments and pension contributions.
In addition, you will also need to pay Employer National Insurance which is based on your employees’ salaries.
Real Time Information (RTI)
HM Revenue and Customs have changed the way that payroll taxes are reported. It is now called Real Time Information (RTI). Under RTI employers have to report, their payroll data, to HM Revenue and Customs, online, as it happens.
RTI requires payroll data to be sent ‘on or before’ the payment of salaries is made. Once the data has been submitted it cannot be over written or re-done.
As part of payroll reporting employers have to advise HMRC if a new employee joins or if an employee’s circumstances change e.g. they become a director
Paying HMRC the Payroll taxes due
Payroll taxes are payable to HM Revenue and Customs after the 6th but before 22nd of the month following the payroll date, i.e. for a pay date of 31st March payroll taxes need to be paid after 6th April but before 22nd April.
Processing New Employees
When you hire a new employee they will need to provide you with a current form P45, from their previous employer, or if they do not have this they will need to complete HMRC’s Starter Checklist which will determine the correct tax code to use for them.
Employee tax codes
Employees have a personal allowance by way of a personal tax code so that income up to that amount is free of tax, but HM Revenue and Customs will advise the employer what tax code to operate including zero or negative codes.
When an employee leaves they need to be provided with a P45 showing their leaving date, their taxable pay for the year to date together with tax paid and their tax code.
Any statutory payments, Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay or Statutory Adoption Pay are processed through the payroll. You are able to recover payments for Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay but the amount that you can recover depends on amount of Employer’s and Employee’s National Insurance paid in a year. You can reclaim the appropriate recoverable amount by reducing your monthly payroll tax payment to HM Revenue and Customs by that amount.
If you are paying a reduced amount of payroll taxes, due to recovery of a statutory payment, then a further online report needs to be sent to HM Revenue and Customs.
Year end reporting
At the end of the tax year (5th April) you need to make your final report for the year to HMRC and provide each of your employees with a form P60 (which summarises their total pay and deductions for the year). As part of your yearend reporting you will also need to advise HMRC about any expenses and benefits.
Our Payroll Services
The service that we provide to most of our clients is as follows:-
- Apply to HM Revenue and Customs for Payroll scheme
- Weekly or monthly payroll processing including the calculation of payroll taxes, PAYE, National Insurance (both Employee and Employer) and Student Loan Repayments, that are due.
- Process calculations for statutory leave: SSP, SMP, SAP, SPP as well as recovery calculations
- Payment of the salaries by Bank Transfer following client’s approval of the Payroll summary that we will send. NB for us to pay salaries we need to be on your bank mandate.
- Payslips can either be mailed to employees or we can email them with password protection.
- RTI reporting to HM Revenue and Customs.
- Payment of Payroll taxes to HM Revenue and Customs when they are due. NB for us to make this payment we need to be on your bank mandate.
- Process starter information.
- Produce P45 for any leavers.
- Complete year end reporting and issue employees with a P60.
- Handle any payroll queries from employees.
- Be a point of contact for HM Revenue and Customs if they have any questions.
Alternatively, if you do not wish us to be on your Bank mandate we are able to send you a Payroll Summary excel spreadsheet detailing the salary amounts and payroll tax amounts that are due.
As of April 2023, eligible employers are able to get up to £5,000 off their National Insurance bill. The allowance reduces your Employers National Insurance each time you run a payroll until the £5,000 limit is reached or the tax year ends whichever is the sooner. More information can be found here.
Miscalculating a UK payroll can be costly for both the employee and the employer. Please get in touch for further support on how we can assist you with your UK payroll for overseas companies establishing themselves in the UK marketplace.
Last updated: October 2023.