Outsourcing your payroll is a great way to let you get on with your business knowing that your payroll is taken care of. It frees your business up to work on your business products and allows the flexibility that many companies cannot afford with having their own payroll in house.

Our flexible payroll services include a bespoke service working closely with our clients to ensure that we achieve accuracy and efficiency. As an accredited agent we can take care of all your salary calculations, HMRC, pensions and other needs related to PAYE. Employing Harrison Hinchliffe & Co we can deal with all the revenue on your behalf further freeing you up to focus on your business goals.

We are completely RTI compliant, this requires all UK employers to notify HMRC of their liability to PAYE at the time or before they make payments to employees. With our payroll software, we are able to collect the relevant information and it then can be sent to HMRC through our Government Gateway.

This is another headache that you as an employer don’t want to be faced with, so it makes sense to outsource your payroll solutions to a reputable accountants firm.

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PAYE & CIS in more detail

As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

Payments and deductions

When paying your employees through payroll you also need to make deductions for PAYE.

Payments to your employees

Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay.

Deductions from their pay

From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.

Reporting to and paying HMRC

Reporting pay and deductions

We will report your employees’ payments and deductions to HMRC on or before each payday.

Our payroll software will work out how much tax and National Insurance you owe, including an employer’s National Insurance contribution on each employee’s earnings.

Paying HMRC

We will send you a report monthly with details of what is due, when it is due and how to pay it..

Contribution rates

An employee’s Class 1 National Insurance is made up of contributions:

• deducted from their pay (employee’s National Insurance)
• paid by their employer (employer’s National Insurance)

The amounts deducted and paid depend on the employee’s earnings and National Insurance category letter.

Employee National Insurance rates

This table shows how much employers deduct from employees’ pay for the 2019 to 2020 tax year.

Category letter	£118 to £166 a week (£512 to £719 a month)	£166.01 to £962 a week (£719.01 to £4,167 a month)	Over £962 a week (£4,167 a month)
A	0%	12%	2%
B	0%	5.85%	2%
C	N/A	N/A	N/A
H	0%	12%	2%
J	0%	2%	2%
M	0%	12%	2%
Z	0%	2%	2%

Employer National Insurance rates

This table shows how much employers pay towards employees’ National Insurance for the 2019 to 2020 tax year.

Category letter	£118 to £166 a week (£512 to £719 a month)	£166.01 to £962 a week (£719.01 to £4,167 a month)	Over £962 a week (£4,167 a month)
A	0%	13.8%	13.8%
B	0%	13.8%	13.8%
C	0%	13.8%	13.8%
H	0%	0%	13.8%
J	0%	13.8%	13.8%
M	0%	0%	13.8%
Z	0%	0%	13.8%

PAYE tax rates and thresholds	2018 to 2019
Employee personal allowance	£228 per week £988 per month £11,850 per year
UK basic tax rate	20% on annual earnings above the PAYE tax threshold and up to £34,500
UK higher tax rate	40% on annual earnings from £34,501 to £150,000
UK additional tax rate	45% on annual earnings above £150,000

Employment Allowance

You could get up to £2,000 a year off your National Insurance bill if you’re an employer.

What you’ll get

The allowance will reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £2,000 has gone or the tax year ends (whichever is sooner).

You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £2,000 each tax year. You can still claim the allowance if you pay less than £2,000 a year.

Eligibility

You can claim Employment Allowance if:

• you’re a business or charity (including community amateur sports clubs) paying employers’ Class 1 National Insurance
• you employ a care or support worker

You can only claim Employment Allowance for one PAYE scheme.

If you’re part of a group, only one company or charity in the group can claim the allowance.

You can’t claim if:

• you employ someone for personal, household or domestic work (eg a nanny or gardener) – unless they’re a care or support worker
• you’re a public body or business doing more than half your work in the public sector (eg local councils and NHS services) – unless you’re a charity
• you’re a service company with only deemed payments of employment income under ‘IR35 rules’

Construction Industry Scheme (CIS)

You must register as a contractor with the Construction Industry Scheme (CIS) if:

• you pay subcontractors to do construction work
• your business doesn’t do construction work but you usually spend more than £1 million a year on construction

You may be a sole trader, in a partnership or own a limited company.

Rules you must follow

• You must register for CIS before you take on your first subcontractor.
• You must check if you should employ the person instead of subcontracting the work. You may get a penalty if they should be an employee instead.
• Check with HM Revenue and Customs (HMRC) that your subcontractors are registered with CIS.
• When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.
• You’ll need to file monthly returns and keep full CIS records – you may get a penalty if you don’t.
• You must let HMRC know about any changes to your business

File your monthly returns

You must tell HM Revenue and Customs (HMRC) each month about payments you’ve made to subcontractors through your monthly return.

On your return, you must declare that the subcontractors listed aren’t employees.

You could get a penalty of up to £3,000 if you give the wrong employment status for a subcontractor on your monthly return.

You must still file a return for the months when you made no payments to subcontractors (unless you request for your scheme to be made inactive). This is called a ‘nil notification’.

Deadlines

Send your monthly returns to HMRC by the 19th of every month following the last tax month.

Example If you’re making a return for the tax month of 6 May to 5 June, it must reach HMRC by 19 June.

Penalties for late returns

You’ll get a penalty if you miss the deadline for filing returns, including ‘nil notifications’.

The penalty will be cancelled if you let HMRC know that you didn’t pay any subcontractors that month.

How late the return is	Penalty
1 day late	£100
2 months late	£200
6 months late	£300 or 5% of the CIS deductions on the return, whichever is higher
12 months late	£300 or 5% of the CIS deductions on the return, whichever is higher

For returns later than this, you may be given an additional penalty of up to £3,000 or 100% of the CIS deductions on the return, whichever is higher.

Pay your late filing penalty.

If you disagree with a penalty

You can appeal within 30 days of the date on the penalty notice.

PAYE Processing Fee Structure:

The cost in dealing with PAYE submissions/returns to HM Revenue & Customs on your behalf is dependent on the number of your employees and is charged in accordance with our fixed charges set out below, to which VAT and disbursements will be added:

Number of Employees	Charge per payslip or statement
1-5	£2.50
6-15	£2.00
16-30	£1.50
31-50	£1.00
51+	£0.75
Standard Processing Charge:
Monthly Payroll	£15.00
Weekly	£6.00
CIS Monthly or Weekly*	£15.00
*one charge per month when the return is submitted not when processed.

Please note that PAYE and CIS processing work can only be undertaken on the basis that you agree to pay our fees by direct debit. You can set up a direct debit with us using the following link: https://dashboard.gocardless.com/api/paylinks/0X94MQYWVE