UPDATED: Pensions auto enrolment (AE) was introduced by Government to help employees save in a tax efficient way for their retirement with the help of their employer and to reduce their reliance on the State Pension. Under AE legislation, employers have a legal obligation to automatically enrol eligible employees into a workplace pension scheme and pay contributions.

The questions businesses most need to consider are:

1. When do my pensions auto enrolment obligations begin and what do I need to do?

2. Which of my employees do I need to automatically enrol?

3. What contributions do I need to pay?

4. What if an employee doesn’t want to join the pension scheme?

5. What is the tax position on pension contributions?

6. What pension provider should I choose for my pension scheme?

7. Once I’ve set up a pension scheme and started assessing and auto enrolling employees, there’s nothing further to do, right?

When do my pensions auto enrolment obligations begin and what do I need to do?

If your company was in existence prior to 1 October 2017, you would have been given a ‘staging date’ by The Pensions Regulator. The staging date is the point at which you would have needed to start assessing your employees and auto enrolling eligible employees into a workplace pension scheme.

For companies that started on or after 1 October 2017, your pensions auto enrolment duties commence on the day that you hire your first member of staff. This is known as your ‘duties start date’.

AE rules can be complex but in summary, companies must:

• Have a pension scheme
• Regularly assess their workforce to determine their eligibility for auto enrolment
• Auto-enrol all eligible employees into a pension scheme and pay contributions
• Communicate with employees
• Re-enrol employees who have opted out every three years (known as triennial re-enrolment)
• Keep adequate records
• Complete a declaration of compliance with The Pensions Regulator

Which of my employees do I need to automatically enrol?

There are three types of employee for pension auto enrolment purposes, which are set out below:

Eligible jobholder – also known as a type 1 worker – Any employee who is aged between 22 and State Pension age and earns more than £10,000 per year must be auto-enrolled into a pension scheme. You have a legal obligation to pay at least a minimum level of contributions (detailed in the next section).

Non-eligible jobholder – also known as a type 2 worker – Any employee who earns more than £6,240 up to £10,000 per year, or any employee who earns more than £10,000 per year and is younger than 22 or older than State Pension Age, does not need to be automatically enrolled. However, they have a right to opt into your pension scheme and if they choose to do so, you must pay at least the minimum level of contributions, as you would for an eligible jobholder.

Entitled worker – also known as a type 2 worker – Any employee who earns less than £6,240 per year, regardless of age. They do not need to be automatically enrolled and they also have a right to opt into the pension scheme if they wish to do so. However, if they do choose to opt in there is no legal requirement for you as the company to pay any pension contributions.

Regardless of which category they fall into, all employees must receive written communications which sets out their rights under auto enrolment.

>See also: The Small Business guide to HR

What contributions do I need to pay?

The level of contributions will depend on how you calculate pensionable pay. The minimum requirement is for contributions to be paid on an employee’s earnings between £6,240 and £50,270 in the tax year 2023/24 (known as qualifying earnings). The current levels on this basis are set out below. 

If you calculate pension contributions on a different basis (e.g. if they are based on basic pay) the minimum contribution requirements will be different. Provided that you are paying at least the minimum level of contributions you have flexibility on the contribution levels. For example, some employers choose to pay more than the minimum employer contribution, which in turn can reduce the minimum contribution that the employee has to pay. However, you will have to provide a certificate confirming the basis of your scheme contributions and that they meet the minimum levels. This certificate will need to be renewed up to every 18 months.

What if an employee doesn’t want to join the pension scheme?

Employees have the right to opt out within 30 days of being auto enrolled and if they do so within this timescale, they are entitled to receive a refund on any employee contributions that were paid during that period. Employees can stop contributions at any time after this point, but they would not be entitled to a refund on previous contributions. Employees should also be clear that if they opt out then this will impact the payout they will have receive at retirement.

Employees can only opt out after they have been auto enrolled. If you have a new employee advise you that they don’t wish to join the pension scheme, they must still be auto enrolled and then can opt out after that point.

Employers are not allowed to encourage employees to opt out of the pension scheme and there are significant financial penalties for companies that are found to have done this.

What is the tax position on pensions auto enrolment contributions?

Employer pension contributions are an allowable expense and therefore can be offset against profits for corporation tax purposes.

Employee pension contributions qualify for tax relief and the manner in which tax relief is granted will depend on the type of arrangement offered by the pension provider. In summary, there are two arrangements:

Net pay arrangement: Contributions are deducted from gross pay, therefore individuals automatically receive their full tax relief up front.

Relief at source arrangement: Contributions are deducted from net pay, with the pension provider automatically adding tax relief of 20 per cent to the pension contribution. Higher rate taxpayers would need to claim any additional tax relief from HMRC.

Which pension provider should I choose for my pensions auto enrolment scheme?

There are a number of pension providers which offer workplace pension schemes that are suitable for auto enrolment. There are a range of factors to consider when choosing a pension provider. These include:

Charges – Charges will impact the value of your employee’s pension pots so it is important that you consider the charging structure operated by your provider. All providers will charge an annual fee which is usually expressed as a percentage of the individual’s pension value (commonly referred to as an annual management charge). This charge is paid by the individual members and is deducted by the pension provider. In addition, some providers will also charge employers either an up-front or ongoing fee to operate the pension scheme.

When considering charges, you should take into account the support and range of services you receive. Cheapest is not necessarily best.

Service – Will your chosen pension provider be able to provide a good level of service, both to you as the employer and your employees? Poor administration can lead to complaints from employees and additional work for you as you spend time resolving issues with the provider.

Investment options – All pension contributions are invested into a default investment fund, unless an individual opts to select their own funds from the range offered by the pension provider. You should ask your provider what the objective of the default investment option is.

Communications support – You are required to issue communications to employees with regards to auto enrolment. In most cases, these communications tend to be issued by the pension provider however you should make sure that your pension provider can and will do this. Even where the provider issues the communications, it is ultimately your responsibility as the employer to ensure that that the communications are sent, contain the necessary wording and are issued within the required timescales.

Once I’ve set up a pension scheme and started assessing and auto enrolling employees, there’s nothing further to do, right?

Wrong! Auto enrolment is an ongoing process, so it is important that you factor this into your regular business processes.

You should review your pension provider on a regular basis to ensure they are continuing to meet you and your employees’ needs. You are able to switch your pension provider should you wish to do so. This should be completed as part of an annual governance review that will also ensure your auto enrolment processes and records continue to be compliant on an ongoing basis.

Auto enrolment can be complex. Fortunately, there are lots of places you can obtain support. The Pensions Regulator website contains useful information on auto enrolment and your payroll provider, if you use one, should be well-versed in auto enrolment. Employee benefit consultants can provide ongoing advice and support with regards to auto enrolment and helping you to choose and review your pension provider.

Finally, remember that while employers have certain obligations under auto enrolment, if you are focused on doing this properly you can use your workplace pension scheme as a valuable tool to help recruit and retain the best employees for your business.

James Brown is employee benefits consultant at IFAs Chase de Vere.

More on pensions

Pensions savings – which option is right for you? – In this piece, Chris Kelly shares a helpful guide to your pension options and how to maximise your savings

The post Pensions auto enrolment guide for employers appeared first on Small Business UK.

Spending money on things now, such as big-ticket items or travelling, rather than saving it for retirement is understandable. But prioritising saving for retirement means having a pension that provides a decent standard of living. That’s where workplace pension schemes come in.

You help your employees save by automatically adding a percentage of their pay to a pension pot and, in many cases, adding a bit extra. 

In this article we explain why workplace pensions schemes are an attractive benefit to offer your employees, how to choose a pension scheme, and your responsibilities as an employer.

Employer responsibilities

Since 2017, it’s been a legal requirement to have a workplace pensions scheme in place from your duties start date – the day your first member of staff starts working for you. This is called automatic enrolment.

All new staff must be enrolled in the scheme, provided they are:

• Aged between 22 and the State Pension age
• Earn at least £10,000 a year (or the equivalent in a pay period)
• Normally work in the UK

It’s then your responsibility to check any changes in eligibility, and keep records of:

• The names, ages, addresses, and earnings of everyone enrolled
• The date that contributions are paid in
• Any requests to join or leave
• Your pension scheme reference or registry number

All these records must be kept for six years, except requests to leave, which only need to be kept for four years.

Finally, every three years, you’re obliged to re-enrol any staff who have left your scheme. You also need to complete a re-deceleration form online with the Pension Regulator.

How much do I pay into an employee’s pension?

You must pay at least 3% of every employee’s  pensionable earnings. If you have set-up a “qualifying pension” then you can restrict the pensionable earning to between £6,240 and £50,270 (for tax year 2022/23) – into their pension pot. using a “Qualified pension” does mean that pensionable earnings also includes any bonuses or commission, overtime, and sick pay or pay for parental leave. Your employee must pay a minimum of 5%.

When you select a pension provider you will be able to choose either a “qualified pension scheme” or set-up one specifically for your employees needs. The pension provider will be able to help you with this.

There are specific rules around employer pension contributions when an employee is on statutory maternity pay. The employer contributions must be based on the salary/earnings pre-maternity leave. That is the employer contributions values do not decrease when an employee is on maternity leave.

Can employees leave the pension scheme?

Yes, employees can ask to leave the pension scheme at any time, and you must remove them within one month of their request. 

If this is within one month of them becoming an active member of the pension scheme (their opt-out window), you must refund any contributions they’ve made in that time. The pension provider will also refund the contributions made by you and the employee. If they leave after the opt-out window has closed, the funds will remain in their pension until they retire. 

Why it’s an attractive benefit to offer employees

A workplace pension scheme might be a legal requirement, but it’s also the most commonly advertised work perk on job adverts, according to a recent survey from Moneypenny. Of 1,000 analysed adverts, 41% offered a pension as a benefit, putting it ahead of both working from home (22%) and flexible working (12%). 

Even though it’s obligatory, it’s good to advertise to potential employees that you’re meeting your responsibilities as an employer.

Choosing a pension scheme 

There are several factors you should pay attention to when choosing a workplace pension scheme.

Can it be used for automatic enrolment?

To be an eligible scheme, your employees can’t be asked to do anything to join the scheme. The pension regulator has a list of suitable pension providers.

How much does it cost?

Both you and your staff will be charged to use the scheme, so it’s important to compare the costs of various providers and find one that complements the way you run your business.

For example, some schemes charge you a monthly fee and some charge one up-front cost, while some charge lower paid staff lower management fees than bigger earners. Staff may also be charged an exit fee if they leave the scheme. The costs are usually deducted from the pension contributions made.

Is it regulated by the Pension Regulator?

This is important as it’s proof that the scheme has a high standard of administration.

What tax relief method does it use?

There are two types: relief at source (tax relief is claimed from HMRC by the pension provider) and net pay arrangements (you calculate Income tax after pension deductions). Choose whichever works best for your employees and their salaries. The pension provider will determine which tax relief method is used.

As per the pension regulator the method you choose will affect your lower or higher paid employees in different ways:

• Employee who does not pay income tax will not receive any tax relief in a Net Pay Arrangement, but Net Pay Arrangement tend to have lower member changes.

• Employee who are subject to higher or additional Income Tax will receive that additional relief directly via a Net Pay Arrangement. If they are in a Relief at Source pension scheme they can claim their full tax relied by completing an Income Tax self-assessment.

Does it offer investment choices?

Any pension scheme used for auto enrolment must offer a default investment fund, though staff who’d like to choose their own investments should be able to do so

Using payroll software for automatic enrolment pension schemes 

Using HMRC-recognised payroll software that’s set up for automatic enrolment is a great way to manage your ongoing pension responsibilities as an employer. It can:

• Store the date of birth, salary, National Insurance number, and contact details of eligible employees 
• Automatically send these details to your pension scheme provider
• Calculate pension contributions for each pay period
• Calculate correct tax relief 
• Track requests to leave or join the pension scheme 
• Monitor the eligibility status of employees 
• Generate payslips and other documents

Not all payroll software is equal when it comes to pensions. Make sure you thoroughly investigate the features of any payroll software you consider using before committing to a subscription.

Communicating the scheme to employees

According to the legislation, you must write to your employees within six weeks of your duties start date to inform them that they’ve been placed in a pension scheme. 

The letter should include an explanation of how the pension scheme works, their date of enrolment, and additional information from the provider. Your provider should be able to supply an information pack that you can forward to your employees. The pension regulator has draft templates that you can use.

Compliance and regulation

Within five months of your duties start date, you must complete a declaration of compliance that tells the Pensions Regulator how you’ve met your duties as an employer. Provided you have your PAYE reference and accounts office reference number, you should be able to do this online in as little as 15 minutes. 

After that, you just have to meet the obligations detailed in the employer responsibilities section above to remain compliant. 

SmallBusiness.co.uk has teamed up with Intuit QuickBooks to help you find the right Payroll software for your business. Find out more about getting your payroll and business finances all in one place.

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A guide to Statutory Sick Pay for employers

The post Workplace pension schemes: What you need to know appeared first on Small Business UK.

Statutory Sick Pay (SSP) supports businesses by ensuring their employees take the proper time to recover as well as preventing illnesses spreading through the workplace.

SSP is still a complicated area of employment law, and many small businesses have questions about where and when their obligations end if an employee is off sick. 

In this article we explain what SSP is, who it applies to, who is exempt, how it works, and how much it costs. 

What is Statutory Sick Pay?

If one of your employees can’t work due to illness, Statutory Sick Pay requires you to pay them £99.35 a week for a maximum of 28 weeks. 

If your company runs its own contractual or occupational sick pay scheme (which must be detailed in any employment contract), you can choose to pay your employees more during their sickness, but you can’t offer less. SSP is the – the legal minimum.

In order to qualify for SSP, employees must:

• Have an employment contract
• Have worked under that contract 
• Have been sick for four or more days in a row
• Earn an average of at least £123 per week (for 2022/23 tax year)
• Have notified you of their sickness within your stipulated time limit

In some circumstances an employee may be ineligible for SSP, including if they:

• Are currently receiving Statutory Maternity Pay or Maternity Allowance 
• Are off work due to a pregnancy-related illness within the four weeks before the due week of their baby
• Were in custody or on strike on the first day that their sickness started
• Are not liable for National Insurance contributions
• Work outside the EU
• Received Employment and Support Allowance within 12 weeks of starting or returning to work for you

How does it work?

SSP is not paid for the first three days in a row that an employee is off sick, provided those are days they’d normally be working. However, regular periods of sickness can be linked if they last four or more days each and are eight weeks or less apart. 

Also, if an employee has begun work on a day, that day can’t count as a sick day.

When SSP becomes payable on the fourth day, your employee can receive up to £99.35 per week for up to 28 weeks, which should be paid on the same schedule as their wages, and with income tax and National Insurance deducted if applicable. SSP is payable by the day. 

As soon as an employee returns to work, you should resume paying them at their normal rate. There’s no legal obligation to keep records of SSP payments, but it’s wise to maintain absence records in case there’s ever a pay dispute. 

SSP doesn’t affect an employee’s statutory holiday, which should still be accrued no matter how long they’re off sick, and they should be allowed to carry any holidays not taken due to sickness into the next year. 

Can I ask for proof?

You can only ask for a fit note after your employee has been off for more than seven days in a row. A fit note must be issued by a doctor or hospital, or if you agree, proof can be in the form of an Allied Health Professional Health and Work report. 

SSP and coronavirus – can you make a government claim?

If you paid SSP to your employees during the pandemic, you could claim it back using the Coronavirus Statutory Sick Pay Rebate Scheme. However, the scheme was closed on 24 March 2022. 

As of that same date, your employees are no longer entitled to SSP if they’re self-isolating due to Covid-19, unless they are unable to work due to sickness.   

SmallBusiness.co.uk has teamed up with Intuit QuickBooks to help you find the right Payroll software for your business. Find out more about getting your payroll and business finances all in one place.

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8 key things to do when employing people

The post An essential guide to Statutory Sick Pay for employers appeared first on Small Business UK.

Taking on your first employees is a big milestone for your business, and an opportunity to find talented people that will help propel it to the next stage of growth.

However, staff salaries are usually one of the biggest ongoing expenses your business will face, and while a great hire will add real value, a bad hire will cost even more in wasted time and resources.

Thankfully, there are steps you can take to limit employment costs and to make sure that, when you do find a great candidate, you can maximise the chances of a successful hire.

Here are the eight key things to do when employing people.

1. Consider the costs of hiring an employee

According to the ONS, the median UK salary in 2021 was £31,772, up 4.3% on 2020.

If we divide the total £1.6 trillion turnover of UK small businesses (0-49 employees) by the total number of those businesses (5.5 million), we get an average annual turnover of £290,000. That means a small business could spend nearly 11% of its annual turnover on one employee. 

Of course, investing in a great employee pays dividends in the long run, but make sure to properly account for the cost of any new hire.

2. Explore hiring temporary or seasonal employees

If you need labour to meet spikes in demand, but don’t want to pay full salaries, you can hire temporary or seasonal employees to bolster your staff around peak trading periods without being overstaffed during quieter months. 

Temporary employees are usually hired on a fixed-term contract, meaning you’ll pay them a fixed amount to work for a set period. However, you should be aware that, unlike contractors, temporary staff should have the same working hours, pay, and holiday allowance as your full-time staff. 

3. Understand the rules when taking on someone who’s self-employed 

Using contractors or freelancers is a great way to access highly skilled labour without having to pay the full and hefty salaries that those kinds of jobs can demand, as well as sick pay, holiday pay, National Insurance, and pension contributions. 

If you do use self-employed contractors or freelancers, you need to be fully au fait with the regulations to avoid falling foul of employment law. 

In practice, this means not exploiting someone by treating a self-employed worker like an employee without offering them any of the benefits of full-time employment. 

According to gov.uk, someone is employed if they:

• Are required to work unless on leave
• Are paid by you to work a minimum number of hours
• Are managed or supervised by someone at your company
• Cannot offer their work to someone else
• Get paid holiday
• Are bound by your disciplinary procedures
• Receive their working tools from your business

You should also be aware of IR35, which was introduced in 2021 to ensure contractors who provide their services to your business through an intermediary (who would otherwise be classed as an employee if they provided their services directly) pay the correct tax. You can use the CEST tool provided by HMRC to check the employment status of potential contractors or freelancers.

4. Create an employment contract and a written statement of employment 

An employment contract is a legally binding agreement between employer and employee that establishes the terms of their employment, including pay, working hours, holiday days, responsibilities, standards of behaviour, and the statutory terms set out in employment law. 

This is an essential document because, not only does it outline the rules and establish norms that both employer and employee must abide by, but it also ensures that there’ll be consequences if either party violates the terms of the contract. For example, you could be taken to court if you fail to pay your employee’s stated pay, and your employee can be legally fired if they consistently fail to carry out their duties. 

5. Share your employee handbook

An employee handbook details everything a new starter might want to know about your company, which can help them to settle into their new surroundings and ensures a positive and consistent workplace culture.  

While not a legal requirement, there can be some crossover with your contract, as the handbook can be an easier reference point. It’s important to detail expectations of behaviour during the working day, such as limiting use of distractions like social media and phones, as well as standards of dress and timekeeping. You should also include information on company values, strategy, and perks that your new employee can enjoy, which can help to build loyalty.

6. Know the rights your employees have

Your employees have certain rights that are enshrined in law, including:

• Statutory payments
• Minimum notice periods if they quit or are dismissed
• Protection against unfair dismissal
• The right to request flexible working
• Time off for emergencies

If you don’t offer these rights, you could face legal proceedings. 

7. Ensure employees understand your holiday policy

A good break will ensure your employees remain refreshed, revitalised, and ready to perform to the best of their abilities. That’s why, by law, your full-time workers must receive at least 28 days paid holiday a year, which can include bank holidays. This should all be detailed in their employment contract, as well as how much notice they need to give, and your right to refuse a holiday request if it would result in understaffing or if an important event is coming up.

Beyond that, it’s up to you how much time off you give them. Some businesses offer an additional day off for every year an employee remains at the company, which is a nice way to promote loyalty. Others have started to experiment with ideas such as unlimited holiday, with varying degrees of success. 

8. Explore government grants that are available to help with hiring employees

Because employing talent doesn’t come cheap, the government offers several grants that your business might be eligible for that can help with the cost. 

For example, if you have fewer than 50 employees, and take on an apprentice between 16 and 18 (19-24 if they’ve been in the care of their local authority), the government will pay 100% of their training costs up to the funding band maximum. You’ll still need to pay them a wage, but you don’t need to pay National Insurance if they’re under 25, on an approved government apprenticeship, or earn less than £967 a week.

In addition, eligible businesses are entitled to claim Employment Allowance (Up to £5,000 for 2022/23 tax year). This reduces the amount of employer National Insurance payable.

Discover more government support in our guide to the 150 small business grants you can apply for right now. 

SmallBusiness.co.uk has teamed up with Intuit QuickBooks to help you find the right Payroll software for your business. Find out more about getting your payroll and business finances all in one place.

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Five employee benefits to attract the best talent when re

The post 8 key things to do when employing people appeared first on Small Business UK.

Starting a business in the UK is as easy as opening a laptop or switching on your smartphone. Case in point is websites like eBay, Instagram and Fiverr that are full of people flexing their side hustles, pushing the number of self-employed people to a peak in 2020 of more than 5 million, up from just over 3 million in 2000.

But while hundreds of thousands of people strike out on their own each year, only a small proportion of these businesses grow their headcount beyond the initial founder. Of the current crop of 5.6 million private sector businesses, 4.2 million have no employees.

Given the amount of creativity and effort on show, what’s holding the country back?

Recruiting people takes time

The key issue for budding entrepreneurs is that while starting a business is easy, recruiting people to help run that business is hard. First, there’s the practical reality that, in order to take on a recruit, you must devote time away from core business tasks to prepare for a newcomer, finding the right talent, and then training them to work independently. 

Lastly, you must sacrifice revenue to pay them adequately for the work they do, as well as related costs. In short, most businesses can’t avoid a short-term hit when they become an employer for the first time – which puts a lot of people off.

Then there’s the admin. Small businesses know that the Government’s main concern is that you pay your taxes on time, but when you start recruiting it wants – quite rightly – to ensure that you treat people fairly and that they have a safe working environment.

So there’s a lot more admin. 

Growing a business means stepping back, at least to a degree, from your day-to-day work and focusing on issues related to HR compliance. Of course, you might employ more people to take care of this work too, leaving you to deal exclusively with strategy and growth, but that step is probably somewhere off in the future.

If you’ve made the decision to employ someone, then congratulations. The following checklist will help you navigate the basics of becoming a boss.

Seven steps to growing your team

Let’s imagine you have already interviewed a selection of candidates and are ready to hire. You’ve cast the net wide, reviewed CVs, had the conversations, ensured they’re made of the right stuff and, finally, you’re ready to move forward. Now, take time to ensure you’re ready.

#1 – Legal status

For obvious reasons it’s hard to quantify how many people are working in the UK without the legal right to do so.

It’s why the authorities take an extremely dim view of employers hiring workers illegally, with maximum penalties including five years in prison and unlimited fines.

The law targets those with “reasonable cause to believe” a member of staff lacks the right to work in the UK, perhaps because they don’t hold the right permissions or aren’t allowed to carry out certain types of work.

Always assess documents for authenticity and carry out a right to work check if you are concerned, especially if you operate in an industry where the problem is common. And don’t assume that if a person has a National Insurance number, they have a right to work in the UK. This isn’t always the case. And conversely, someone may have a right to work but not have a National Insurance number.

#2 – Pay at least minimum wage

The National Minimum Wage is there to ensure people get a basic rate of pay. The rate varies among different age groups and workers over 23 years of age are entitled to the higher rate National Living Wage. 

The legislation affects all employers, large and small, and the rate of basic wages increases most years, set by the Low Pay Commission. It’s worth checking the current National Minimum Wage and National Living Wage rates.

#3 – DBS checking

If your employees will be working with vulnerable groups, such as children and people with special needs, they’ll also need to pass a Disclosure and Barring Service (DBS) check.

A DBS check will turn up any unspent convictions, while more thorough versions also show whether candidates appear on any lists barring them from specific roles. You can check which DBS check is right for your employee.

#4 – Get insured

You’re responsible for the welfare of your people, so secure employers’ liability (EL) insurance before their first day on the job. EL insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you.

The policy should provide at least £5 million of cover and come from an authorised insurer. Otherwise you’ll pay a £2,500 fine for each day you employ someone without a policy in place.

#5 – Provide a written statement of employment

As an employer you must provide this – it sets out the terms of employment – if you’re employing someone for more than one month. It must include important details such as pay, working hours, holiday entitlement, sick pay and other paid leave (even if you only keep to the statutory minimum requirements), any benefits, as well as conditions for termination. (It’s worth noting that a written statement of employment isn’t the same as an employment contract.)

As a start, you can download the template provided by Acas.

#6 – Tell HMRC

Before taking on your first employee, register as an employer with HMRC. You must do this within four weeks of new staff members’ first payday. HMRC will provide you with an employer PAYE reference number, which can take up to five working days.

Sticking with financial matters, you must also set-up and manage a basic workplace pension scheme for all eligible employees. And you must make an employer’s contribution where applicable.

#7 – Get organised

With all of the above to manage, it pays to get organised. Smart, simple accounting software smooths tasks such as bookkeeping, staff expenses and payroll, as well as invoicing and VAT tax calculation.

The best accounting software allows you to synchronise with your preferred business apps, while automating the link between your bank accounts and your business’ financial records, removing a lot of admin. 

If you’re serious about your business, employing people is a must. Doing it for the first time is a daunting task, but with the right preparation and tools you can make a success of it, potentially laying the foundations of stellar growth to come.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

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Five employee benefits to attract the best talent when recruiting for your business

The post Becoming an employer for the first time? What you need to know appeared first on Small Business UK.

In the current tech-enabled, hyper-connected business environment it’s hard to do anything without software. Payroll is no different. In fact, you must use software for payroll – there’s no other option except in very limited circumstances.

Payroll software sends RTI (Real Time Information) to HMRC on or before your employees’ payday. Known as a Full Payment Submission (FPS) it tells HMRC about payments to your employees and what deductions you’ve made.

But how do you know which package is best for your business? Read on to find out.

‘You have to use software for payroll – there’s no other option except in very limited circumstances’

Do it yourself payroll

First, the basics. Before you take on your first member of staff you must take steps to ensure they’re paid on time, and that the relevant authorities are kept in the loop.

Register yourself as an employer with HMRC and get a login to the PAYE Online service. You can use this service to check what you owe HMRC, pay your bill, etc.

Then it’s a case of keeping your records up to date and feeding accurate information to HMRC at the right time. This includes salaries, expenses, employee subsidies, pension contributions, and the timing of your payroll runs – plus more besides.

While the tax year-end isn’t not as onerous as it used to be, it’s important to keep track of deadlines and ensure you are prepared. You don’t want to leave it to the last minute only to discover you’ve mislaid your HMRC login details.

It’s a lot simpler if you operate as a sole trader or limited company with only a small number of directors and no other employees. But you must still register for PAYE, file a P60 and an end of year return, as well as the month-by-month details of your salary, benefits, and expenses.

Working with payroll software

You must use software for payroll – there’s no other option except in very limited circumstances. But on the plus side payroll software processes the financial information you input and, with automation, smooths the process of paying your people, while tracking and maintaining the financial information this creates.

Payroll software is designed with features to help you make the right choices dependably and securely. It might offer the option to connect with your banking provider so that financial information is logged without you having to manually input data, saving time and potentially also costly errors.

In short, the benefits of payroll software are that it is custom designed for the job, easier to maintain, reduces human error, and speeds up the process of inputting and filing information.

Of course, you must pay subscription fees – how much depends on your provider and the level of service you require – and you might need training or even additional staff members to keep your information up to date.

6 questions to ask before choosing payroll software

If you’re serious about adopting payroll software to help you compensate staff, provide benefits and comply with HMRC’s rules and regulations, then there are a few questions to ask yourself before choosing any specific package.

What services do I need?

The best software providers offer packages tailored to different types of businesses, from director-only operations, to growing firms with dozens of staff members. Take your time to understand what’s right for you.

How do I pay?

Like most software these days, many payroll providers offer their products “as-a-service”, so instead of paying a large upfront fee, you pay a subscription on a monthly or annual basis to use the software. And you might get a discount for paying for a period in advance.

Is it easy to set-up?

Your provider must show that their system integrates easily with your organisation’s everyday processes. Look for information on the set-up process and ask customer service staff for details of how this works, and whether any free training is provided for new customers. What does it involve, how long might it take, and what help will you receive?

Is your provider reputable and secure?

Read reviews online and ask your peers for their views on the reputation of the software company you want to use. Look, in particular, for feedback on security, customer service, and ease of use.

Can you try before you buy?

Market-leading payroll software companies are proud of the service they provide and should be confident that you’ll buy if you’re allowed to try. Ask about trial periods or money-back guarantees – these are your “get out of jail free cards” in the event you make the wrong decision.

Is it cloud-based and how many users am I allowed?

Cloud-based software is accessible anywhere, so long as you have the right login details and permissions, so it’s a lot more flexible from a user’s point of view. It’s also more secure in most cases, because information is stored on dedicated servers and not, for example, on a computer in your office. Make sure you have enough licences to cover your team.

Payroll software can be a quick, efficient and no-nonsense way to run your company payroll, leaving you more time to focus on boosting your business. By taking your time and picking the best possible service for your business, you could see returns for many years to come.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

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Small business employees show little tolerance for payroll errors

The post Using software to run your small business payroll appeared first on Small Business UK.

A perennial question for small business owners is which jobs you can do yourself and which should you outsource.

Depending on the industry you’re in, many of these decisions are clear enough: you wouldn’t buy servers to host your own website, for example, or code some word processing software when tech titans have done the job for you.

But other decisions require a bit more thought. There’s a balance to be struck: do you need a cleaner or is there time to whizz around the office with a vacuum cleaner once a week? Can you maintain your social media accounts, or would a freelancer do it better?

One of the biggest decisions all employers face is whether to run your own payroll, pay for the services of a bookkeeper or, perhaps if your business is big enough, an accountant, either full or part-time.

The quid pro quo is fairly clear: doing it yourself saves money; getting someone in saves time. Which is more valuable depends on the stage of your business and whether you are cash-rich and time-poor or vice versa.

Many business owners are somewhere in the middle, so the choice isn’t completely clear. But here are some pros and cons to help you decide.

Do it yourself

Pros:

It’s cheap

The most obvious reason to take the DIY route is also the best: it’s cheaper to do it yourself. If you can spare the time, then this is the route for you.

Cons:

It’s quite complex

Setting up and maintaining your payroll requires an upfront investment of effort followed by routine maintenance.

The steps include:

– Registering as an employer

This is necessary whether you run the payroll yourself or not. As a new employer, you must notify HM Revenue and Customs (HMRC) within four weeks of your employees’ first payday and request a login for the PAYE Online service.

The PAYE Online service allows you to pay bills, check tax codes, get alerts if you report or pay late, and send expenses and benefits returns.

– Deciding what payroll software to use

Since payroll must be done using software – and HMRC permits exemptions on a case-by-case basis only – you’ll need to decide what payroll software to use.

Payroll software is designed to seamlessly transact with the HMRC, and pension provider if applicable, taking the pain out of financial record-keeping and compliance, such as QuickBooks – more on this later.

– Keeping your records accurate and up to date with HMRC changes

As an employer, HMRC requires you to keep records such as what you’ve paid your employees, reports you make to HMRC, and so on.

And probably the trickiest part of running your own payroll is keeping on top of changes including tax code notices.

Then there are P45s, student loan repayments, payroll-giving schemes, and apprenticeships. The list goes on. If you have ever described yourself as “not a detailed person” – or you’re the type who leaves everything to the last minute – this is not the job for you.

– Annual reporting

On top of keeping a running total of every financial matter impacting your business, you’ll also need, as an employer, to submit the final FPS of the tax year and as well as your employees’ P60s.

‘With payroll sorted, you’re free to work on your business, and do what you do best’

Getting the experts in

Pros:

Focus

With a payroll professional to help you, such as a bookkeeper or accountant, you’re free to work on your business, including strategy, marketing and business development. You have the opportunity to capitalise on your investment by growing the business faster than if you spent time on payroll tasks.

Professionalism

A specialist works faster and smarter than a novice, with less room for mistakes. But know that, as the employer, even if you outsource payroll, you’re still liable for fines and penalities if you don’t meet your obligations to HMRC.

Get some time back

For many business owners, the technical and compliance aspects of their operation come a distant second to the job of attracting customers and revenue. Admin tasks are often left until after growth projects are complete, meaning late in the day or even after normal working hours. In this case a payroll professional will give you back your free time. And with payroll sorted, you’re free to work on your business, and do what you do best.

Business insights

A bookkeeper or accountant will create useful reports and potentially highlight problems or opportunities you might otherwise miss. A good accountant is worth their weight in gold, providing you with business insights to help you grow your business. They’ll also give you a strategic advantage by helping you understand the implications of the numbers on the page.

Cons:

In a nutshell, hiring a payroll professional (assuming they are reputable and do a good job) does cost money. And you’ll need to factor in time communicating with them, the small amount of disruption if they need to engage employees, and the fact that you can never completely rid yourself of responsibility for form filling, however hard you try.

Whether you run payroll yourself or hire the services of an expert, it’s important to use the best tools for the job. Dedicated accounting software, such as QuickBooks, makes tasks like bookkeeping, staff expenses and payroll easier, quicker, and more accurate. And accountants and bookkeepers can work collaboratively online with you, which means you’ll all have access to up-to-date information.

The best software allows you to sync bank accounts and business apps, providing a secure channel of information between the two. Meanwhile, automated filing of income and payments removes the need to input data manually and potential data-entry errors.

Like all forms of business compliance, payroll is a complex yet necessary task. How you deal with it is up to you, but the job is a lot easier if you take advantage of the payroll software on offer.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

Read more

Should small businesses outsource their payroll management?

The post Payroll: DIY or bring in the professionals? appeared first on Small Business UK.

People on zero hours contracts are entitled to holiday and holiday pay, just like your regular staff.

In this quick guide, we’ll explain how to do it.

How do I calculate holiday entitlement?

Zero-hour contract employees, like any employee, are entitled to 5.6 weeks of paid holiday per year. This can include bank holidays if you wish. The rules around holiday entitlement are fairly loose, as long as you meet the 5.6 week minimum.

>See also: Zero hours contract rights

A popular method is the 12.07 per cent calculation. This is arrived at using the calculation of5.6 (weeks of paid leave) divided by 46.4 (remaining weeks in the year). So, holiday is accrued at a rate of 12.07 per cent per hour.

If a worker on a casual contract works ten hours in a week, then they would have accrued 1.2 hours holiday. (12.07 per cent of ten). If the employee worked 30 hours, they would accrue 3.6 hours of holiday for that week. (12.07 per cent of 30).

To calculate average hourly pay rate, only the hours worked and how much was paid for them should be counted. Take the average rate over the last 52 weeks. If no pay was paid in any week, count back another week so the rate is based on 52 weeks in which pay was paid. You can count back a maximum of 104 weeks to find these.  

If a worker has less than 52 weeks of pay, use the average pay rate for the full weeks they have worked.

To work out a week’s pay for someone who’s paid monthly, you can:

• Calculate the worker’s average hourly pay for the last month. Do this by dividing the month’s pay by the number of hours worked in the month.
• Calculate the weekly pay. Do this by multiplying the average hourly pay by the number of hours worked in a week.

Use the weekly pay calculation for each of the last 52 weeks to work out an average week’s pay.

What about breaks in employment?

The main difference between zero hours and the employed is the break in employment. A break in employment counts as seven consecutive days without work, from Sunday to the following Saturday.

If there’s a significant break in employment (four weeks is the standard), you must pay for any holiday they’ve built up and not taken.

>See also: Zero hours contract redundancy

Anything else I should know about holiday entitlement and pay?

The government says that zero hours contract holiday pay should be paid when annual leave is taken. You can’t include a sum for holiday pay in the hourly rate (known as ‘rolled up holiday’).

Ensure you lessen your chances of having a dispute by getting your contract right from the start. Use this Zero hours contract template to help.

If you have any questions about holiday pay issues, contact the Advisory Concillation and Arbritration Service.

Read more

Zero hours contracts advantages and disadvantages

The post Zero hours contracts holiday entitlement and holiday pay appeared first on Small Business UK.

Today, several businesses are receiving services from other companies on topics that are not in their area of expertise. In this case, which we define as an outsource service, it is possible to receive the most professional service for your specific needs if you cannot perform on your own or prefer to assign it to a more experienced party. That is why many corporations choose to outsource some of their operations. Payroll is one of them.

In fact, a company may start receiving outsource payroll services for several reasons. For example, there are many significant benefits of outsourcing payroll systems for large companies. The more employees working in the business, the more complicated the payroll becomes and the higher the burden falls to HR employees. If you outsource the payroll service, you are not just outsourcing payroll preparation. The service also provides you with resources such as leave and absence monitoring, entrances, and exit transactions. For this purpose, payroll services provide large-scale companies with savings of time and effort.

For small companies and start-ups, outsourcing payroll services has numerous benefits. Imagine a business that was founded a year or two ago and employing around ten people. There is no human resources division yet. The owners do not have a deep understanding of wage payments, legislative benefits, taxation, and regulations. These conditions are susceptible to making mistakes and can subject businesses to substantial fines in their early years. Small businesses and modern enterprises, therefore, get rid of their workload by contracting their payroll services and shifting legal responsibility to the organisation in which they receive payroll services.

However, there is now also a payroll software market that can run on its own and needs relatively little technical knowledge. And many HR operations and legal transactions can be carried out using the same programme. In other words, instead of paying a large fee directly through outsourcing a payroll firm, it is possible to manage the payroll operations of a small start-up by buying software.

So, how do you choose the most convenient payroll service among numerous payroll service providers? Here are some features that you may want to keep in mind.
 
Discover more around small business payroll

Privacy of data

• All payroll providers provide a broad range of services – payroll processing, filing and paying payroll taxes, reports, mobile connectivity, integrations and others. Never neglect the protection of payroll data for something else.
• Be mindful of the payroll service provider’s past – any lack of detail or previous reference works can certainly cause you to give up on that vendor.

Data security and data access

• Information Protection and Payroll are two sides of a coin, whether in-house or subcontracted. More care and attention is needed when the data of the employees is in the hands of third parties.
• Learn how the payroll service secures information and confidentiality. Ask how the provider has been able to avoid data attacks in the past. Learn what steps they use to retrieve the data when needed.

Employee self service features

• Paper-based payroll has now completely moved to an evolved digital model. Check if the software enables your employees to see their payroll documents.
• Choose a payroll service that provides the Employee Self Service (ESS) plan. This makes a simple link between workers and their payroll and creates a more digital company culture.
• Free payroll trial, if applicable, will be most appropriate as it is providing you experience beforehand.

Customer support provided by the software company

• A payroll service provider can cause a call for any payroll/tax failure in your business. Therefore, you need to find a payroll service that will give you quick customer support and solve your problems.

Pricing and costs

• A reasonably priced payroll service that performs the work hassle-free is the worth of your money. As the owner of a small enterprise, ‘How much?’ is actually a priority when considering a payroll service. Be aware of secret fees and the exact pricing method until you settle on a payroll service. For example, if you have freelance employees or you need to pay for consultants on an irregular basis, then your software plan should be flexible to meet this need.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

Read more

Protecting employees’ payroll during the coronavirus crisis

The post Should small businesses outsource their payroll management? appeared first on Small Business UK.

It is very rare that you will get advance warning that a disaster is about to hit your company.

Even if you do have some time to plan, it doesn’t mean things won’t go wrong as every crisis is unique and brings with it its own challenges. The current crisis we are facing is unprecedented, and certainly unexpected, meaning many employers will be dealing with business-critical issues they never thought they would have to factor into their plans.

With this in mind, the coronavirus outbreak has reminded all of us that having robust continuity strategies in place to deal with a crisis are critical. However, a lot of businesses will have had little or no contingency planning for a crisis of this magnitude and will be scrambling around trying to figure out what to do in the face of such uncertainty.

>See also: Business continuity plan: What it is and why you need it

One of the major problems that surfaces from not having a robust plan in place is that in putting out fires, as an employer you can forget about arguably your most important stakeholder – your staff. Many are working harder than ever to take up the slack to ensure the businesses they work for survive this global pandemic. With members of staff potentially on furlough and those remaining in work adapting to meet the changing landscape, many teams are working harder than ever to support their business during unprecedented times. So, as an employer it is important not to forget this and asses the most appropriate ways to make sure staff feel they are being valued.

This means that, in addition to business operations and sales, your business continuity plans should focus on protecting your employees. During this period, businesses could be faced with payroll staff having to work remotely with limited access to systems and/or to self-isolating. So contingency plans may be required.

To protect your employees, your contingency plan should consider the following questions.

What do I do if the payroll processing team isn’t available?

If your payroll team is unavailable, those who step in to support your business need to be able to collate the required information and if necessary, process this into your payroll software.

If you use a payroll bureau then someone should be aware of how to give them all the information they require. That information may include, among other things:

• Starters and leavers;
• Permanent changes i.e. salary increases etc;
• Pension changes (in line with auto-enrolment legislation);
• Sickness and absence recording (this one will become vital); and
• Parental leave changes

An understanding of how this data is currently shared with the outsourced provider will be important. Is the data already held within your HR and/or time and attendance systems?  Is it collated manually and then a standard template used to provide the data? Do you have an agreed payroll cut-off date and submission deadline?

Does the change in payroll legislation impact me?

Pre COVID-19, payroll legislation was already a complex area. Now, we see rules and policies changing daily, so for a business owner you may have to factor this into your contingency plans.

If you have outsourced your payroll function, this should not concern you, although it is still important someone is able to check and authorise the payroll when complete.

If you process payroll in-house, this may be very concerning right now as you may only have one or two people with this specific knowledge. It can be difficult and uncomfortable involving additional people in the payroll process and you may rightly have concerns about the sharing of confidential information.

We have seen many businesses struggle though by limiting involvement to just one or two people. I would urge you to identify a trusted person in your business to provide additional cover here as a short-term solution.

What do I do if the payroll manager becomes ill?

In this current context, one of the most important issues that may arise is how you will pay your staff should your payroll manager become ill.

You should ensure that you have a solid and transparent plan to pay employees in the coming months.  As I have said, adding additional cover is a sensible step in the short term but this may not feel enough to be a long-term back-up plan.

Resolving this situation quickly is tricky. It may be worth considering asking whether any outsourced providers have experience on your payroll system, and if so, whether they would be prepared to operate your payroll for a short period as a further contingency. Some key things to ask yourself as part of this planning should include:

• Who has access to BACS or the finance system for paying your employees?
• If you cannot access payroll, how will you know what to pay?
• How are pension contributions calculated for my employees and how would I communicate details of the amounts for each employee with my pension scheme provider?
• How will you meet the obligation of sharing pay slips with all team members?

Do I have to carry on issuing payslips?

Legally, employees are entitled to a payslip whether working in the office or remotely. This means that plans need to be put in place to ensure your staff continue to receive them throughout this period, including access to stationary or printers being provisioned if you usually issue oriented slips.

If you believe printed slips will be problematic, investigate electronic payslips as an alternative. Lots of firms have turned to this as their default option to combat paper waste, so in the longer term it may benefit the company switching to soft copies.

What are my obligations to HM Revenue and Customs?

Payroll information must now be reported to HMRC on or before payday as part of your RTI filings. You can incur fines if this duty is not met, so it is important that this doesn’t slip as a result of the current stress on the business.

It is important to note that pension contributions under auto-enrolment must continue and will need to be uploaded to your pension provider so that they know the total value of contributions to take. This will usually be by direct debit and crucially you’ll need to state how much to allocate to the pension fund of each employee.

Statutory communication is required to be sent to employees when certain auto-enrolment trigger events take place – it is worth checking whether this is covered by your pension scheme or your payroll or HR team are currently carrying out this task.

What are the key considerations what putting together a contingency plan?

Whether you operate a small business or a large corporation, effectively navigating a crisis depends on your people and processes. Focus on your resources here, making sure your IT is up to scratch. Putting your staff at the heart of your plans will enable you to handle any incident effectively. For those who are looking to develop a robust plan now, there are four key areas to tick off as part of the process:

• Test your processes to ensure they work with all the recent changes;
• Ensure you have additional, appropriate staff in place with access to all payroll, payment and pensions systems;
• If you have time, put training in place so others understand what is required; and
• Speak to your software providers to check if they can increase support if required.

If you have concerns about the resilience of your payroll process in-house then it might be worth considering outsourcing this critical function to ensure that payments to your employees are protected.

Matthew Stark is partner at Mazars.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

Further reading

Government looking at bringing in part-time furlough immediately

The post Protecting employees’ payroll during the coronavirus crisis appeared first on Small Business UK.

Eighty-three per cent of millennials say they would be more loyal to a business that enables them to contribute to social problems.

Clearly, in today’s competitive talent market, there is an increasing need to offer engaging experiences to retain employees.

However, although most companies realise the importance of employee engagement, the majority find it very challenging to find something to actually engage employees with.

Payroll giving is something to consider – through our Give As You Earn (GAYE) scheme over 2,500 companies and their staff to give over £74m to charity each year. Since 1987, over £1.3bn has been given.

>See also: Giving to charity good for business survey finds

What is payroll giving?

Payroll giving is a scheme that enables your employees to give to any UK charity straight from their gross salary (before tax is deducted), and to receive immediate tax relief. Charities also don’t have to claim Gift Aid, so there’s less administration for them and they can plan and budget for the future based on the regular, reliable donations received through payroll giving.

How to get started

There are several reliable, accredited payroll giving providers in the market, each with their own unique offerings. Using my own scheme CAF as an example, we offer three ways for employees to give through their pay:

#1 – Direct to charity

Employees sign up online, choose which charity/ies they want to support and their donation is passed directly to their chosen cause.

#2 – Charity account

The donation is deducted in the same way but goes into an employee’s own personal account, which they can then access online and make onward donations. Donors can either set up standing orders to support charities of their choice or make ad-hoc donations, sponsor a friend or colleague or support a specific appeal.

#3 – Staff charity fund

Employees’ GAYE donations are pooled so that staff can make a more substantial donation to the charity/ies of their choice.

>See also: Why entrepreneurs are more giving to charity as their company grows

What are the benefits for the company?

#1 – Helps achieve wider CSR objectives

Payroll giving enhances existing corporate social responsibility activity; GAYE can be utilised as a tool to drive employee engagement and help achieve broader CSR objectives.

#2 – Creates positive PR

Demonstrates your company’s commitment to supporting the community to wider stakeholders and show employees that you care about the things that are important to them.

#3 – Serves as a differentiator

Provides external recognition for charity contributions through government-recognised quality marks to contribute to making you a preferred employer.

#4 – Helps you understand your staff better

The data generated provides companies with better insight into what employees care about, which helps to create a more driven and engaged workforce.

#5 – Simple to administer

Payroll giving offers a digital-friendly user experience to deliver online support for processing which means that you don’t need a dedicated person to administer your scheme.

What are the benefits for charities?

Payroll giving provides charities with regular, reliable donations that they do not have to claim Gift Aid on. This means less admin for charities, allowing them to plan and budget for the future.

What are the benefits for employees?

Payroll giving is a simple, tax-effective, hassle free way to give to charity. The system is easy to opt in and out of, giving donors full control over their giving.

How can we boost engagement around payroll giving with our employees?

There are various ways of increasing engagement around payroll giving. Some employers choose to match what their employees contribute via GAYE, which serves as a great motivation for employees, knowing their employers help support causes they care about.

A Professional Fundraising Organisation (PFO) specialising in face-to-face engagement with employees can bring life to a promotional campaign and boost sign-up.

How does it work for employees?

Payroll giving comes out of your salary after national insurance, but before tax. This means that you get tax relief on your donation that can be passed onto your charity. If you’re a higher tax rate payer, then this benefit increases.

Here’s an example of how it works:

You’re a standard taxpayer at 20 per cent and make a monthly donation of £20 to your chosen charity. When the money is taken from your salary, you’ll be paying £16 but the remaining £4 will be money you would have paid in tax and not seen in your wages anyway. So, in reality, it has cost you £16 to give £20.

What’s the difference between Gift Aid and payroll giving?

If you’re a UK taxpayer and opt to include Gift Aid on a direct donation, the charity can claim back an extra 25p from the government for every £1 you give. This is great for the charity, but they still have to reclaim the Gift Aid.

Payroll giving simplifies that process; the charity receives your gift straight from your salary before tax is deducted. This means that it not only costs you less, but the donation that the charity receives includes the tax relief, so they don’t need to claim Gift Aid back.

Whether you’re a huge multinational corporation or a smaller, private company, payroll giving offers your organisation a range of incentives. You can engage with employees on issues that matter to them, build your reputation as a responsible, forward-thinking employer, and enable charities to help the most vulnerable people in our society.

Klara Kozlov is head of corporate clients at Charities Aid Foundation

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

Further reading

The key to boosting staff morale can start with charity

The post What is payroll giving and how does it help engage your staff? appeared first on Small Business UK.

Yes, it is entirely possible to set up payroll yourself, although you do need to know your way around a computer.

To DIY your payroll you can either buy an off-the-shelf payroll package or use the HM Revenue & Customs (HMRC) online payroll scheme.

But first, to get started we recommend you check out the HMRC useful guide available here: PAYE for employers, which will tell you all you need to know to get started as an employer.

HMRC have also created a handy list of all the best payroll software for UK small businesses as well as the best paid-for payroll software.

If you have any specific queries not answered by the information on HMRC’s website you can always call HMRC Employer Helpline but you will need your employer reference number when you call. The number is 0300 200 3200. It’s open from 8am-8pm Monday to Friday and 8am to 4pm on Saturdays.

Further reading on payroll

• Four tips to avoid Christmas payroll pitfalls
• What to remember when reporting payroll information to HMRC
• Four GDPR risk areas for payroll and HR

To register for the HMRC online payroll scheme, you’ll need to quote your Employer PAYE reference and your Accounts Office reference.

See this link for all the information you need to start up the HMRC payroll scheme.

The online service helpdesk can be reached on 0300 200 3600 and it’s open the same hours as the Employer Helpline.

As an alternative to using HMRC and setting up payroll yourself, you might want to consider using a payroll bureau or an accountant to take care of your payroll processing. There are a number of payroll bureaux so costs are very competitive.

The main thing to bear in mind is that payroll bureaus have many customers and work to strict deadlines to meet processing requirements.

Many accountants offer payroll services, although generally at a higher cost than payroll bureaux, but sometimes on a more accommodative basis to their customer.

Discover more around small business payroll

Accountants that offer payroll services:

The Accountancy Partnership

Rouse Partners

SJD Accountancy

Watch the below video on setting up payroll for your small business

Further reading on accounts

Which digital accounts software is right for your small business?

The post How can I set up payroll without an accountant? appeared first on Small Business UK.

The legal number of hours between shifts is determined by the Working Time Regulations 1998 directive, subsequently amended by the Working Time (Amendment) Regulations 2007 directive.

The Regulations specify requirements for:

• Night work hours
• Daily and weekly rest periods
• Maximum weekly working time
• Annual leave

For adult workers (over 18 years old) there are three types of break – rest breaks at work, daily rest and weekly rest. The minimum rest period in a 24-hour period should not be less than 11 consecutive hours. In general, workers are entitled to at least 11 hours rest per day, at least one day off each week, and a rest break during the shift if it is longer than six hours. For an adult worker, that minimum rest break is 20 minutes uninterrupted.

Sue Andrews, HR and business consultant at Kisbridging Loans adds, ‘In sectors where services are required to be delivered over a 24 hour period, shift patterns may not allow for an 11 hours break.

Discover more around small business payroll

‘However, workers will then be entitled to a compensatory rest period instead. While these should ideally be taken as soon as possible after the break has been missed, the regulations suggest that an employer will have met their obligations so long as the worker receives on average at least 90 hours rest per week.’

For young workers (under 18 years old), the minimum rest period is 12 hours in any 24 hour period but rest may be interrupted by short duration work or periods of work being split up during the day.

Opt-out agreement

An employer cannot insist that a worker works more than 48 hours per week on average. Any more than this is voluntary and subject to an opt-out agreement.

Note that for night workers, there is a maximum of eight hours work in any 24 hours on average and a right to free health assessments.

Mobile workers are subject to a variation of these rules under the Road Transport (Working Time) Regulations.

You can visit the Department for Business Innovation & Skills for more information on the Working Time Regulations and the rules for averaging out the above time limits over a period of time.

In sectors where services are required to be delivered over a 24 hour period, shift patterns may not allow for an 11 hours break.  However, workers will then be entitled to a compensatory rest period instead.  Whilst these should ideally be taken as soon as possible after the break has been missed, the regulations suggest that an employer will have met their obligations so long as the worker receives on average at least 90 hours rest per week.

Peter Done is the founder and group managing director of Peninsula Business Services

Further reading on employment law and advice for employees

• Holiday leave and pay: The law
• Navigating the tribunals process

The post What is the legal number of hours employees can have between shifts? appeared first on Small Business UK.

With the new General Data Protection Regulation (GDPR) coming into force on 25 May 2018, many employers may be worried that they do not fully understand all the new rules surrounding the personal data they hold and is processed for an individual.

The new legislation will have a huge impact on employers, particularly on their Payroll (and HR) departments. If the new rules aren’t followed, businesses could face eye-watering fines.

To make it easier, we’ve highlighted some of the potential risk areas your business might run into after this legislation comes into force.

1. Personal data

Under GDPR, you must review any Personal data you hold about an individual that is required and used by your business. Any data you need to keep, such as for legislative reasons, needs to comply with the legal retention timeframes applicable to that area such as for PAYE, NMW, Maternity, Health & Safety etc.

For all other types of data you will need to consider the purpose you hold that information and for how long, as it should not be kept longer than is necessary or legally required to do so.

Having made the review this will become your data retention policy which must be in line with the GDPR, and any data that it is not necessary to be retained should be securely deleted.

2. Data security

Moving your payroll/HR data to an outside source, such as to a payroll provider or an Accountant, carries its own security risks. In some cases, data is sent via email in a spreadsheet. Historically, these have not always been encrypted or password protected by every company.

Now, GDPR will enforce data security such as this, so you’ll need to ensure all of your data sent is always sent securely. Remember that to put Personal & Personal Sensitive data as part of an email, or an attachment, without suitable encryption is like putting it on a post card.

With the new rules, it’s more important than ever to ensure that payroll/HR data is being transferred securely using a secure system, such as SFTP (Secure File Transfer Protocol). Moorepay uses Moorepayhr, a secure and externally security tested web application and Secure File Transfer Protocol (SFTP) to transmit data.

Discover more around small business payroll

3. Data access

The GDPR gives individuals more rights:

• To view the information you hold for them
• Is this data correct
• Is it being used legally
• The right to rectification of this data
• The right to restriction of the processing of this data
• The right to erasure – ‘to be forgotten’

And more.

There is also the question of access made by the Data Controller and Data Processor in this, so Managers and Administrators access to the records and systems need to be reviewed to make sure they have suitable permissions to access for their respective roles.

4. Software security

Since all your payroll data needs to be secure, so does the software it’s held in.

Under GDPR, the responsibilities for checking and correcting any potential weaknesses in the software’s security lie with both the company and the software provider. That means conducting risk assessments over the whole payroll process, end-to-end.

Contact your payroll provider to check their security and compliance with GDPR.

SmallBusiness.co.uk has teamed up with Intuit Quickbooks to help you find the right Payroll software for your business. To find out more about getting your payroll and business finances all in one place, click here

Further reading on GDPR

• How you risk losing customers over data breaches

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