The short version: Payroll is the system employers use to pay staff and handle tax deductions. If you’re on someone’s payroll, you’re an employee receiving regular wages with tax taken off automatically.
What does payroll cover?
Calculating wages, deducting Income Tax and National Insurance, handling student loan repayments, processing pension contributions, issuing payslips, and reporting everything to HMRC.
Who needs to run payroll?
Any business with employees. Even if you run a small limited company and pay yourself a salary, you need to operate PAYE payroll. Sole traders paying themselves don’t have payroll because they’re not employees.
What about freelancers?
If you invoice for your work and handle your own taxes, you’re not on payroll. But some freelancers work through agencies that put them on payroll and handle tax through PAYE.
Real Time Information
Employers must report payroll information to HMRC every time they pay staff, not just at year end. This is called Real Time Information (RTI).
Need help setting up or running payroll? We can take that off your plate.
