Payroll Software - CC BY-SA 2.0As an employer you will be required to register and report to HM Revenue and Customs (HMRC). You will need to collect and record employee details. Payroll can be outsourced to a payroll provider, such as an accountant, or done within the business using payroll software.

There are some free software options for accounting and payroll, and a wide range of paid for software, including some cloud based payroll. The software listed here is tested and recognised by HMRC. The free options are recommended for businesses with fewer than 10 employees.

An employer is required by law to keep records of employee pay, deductions, HMRC reports and payments, employee leave, employee sick leave, tax code notices, taxable expenses or benefits, and details of any payroll giving. These records must be accurate and kept for three years from the end of the tax year. Data protection rules also apply to the records kept.

Employee payments can include:

  • Salary or wages
  • Statutory sick pay
  • Expenses and benefits
  • Tips
  • Bonuses
  • Commission
  • Holiday pay
  • Medical suspension payments
  • Travel payments
  • Maternity pay
  • Guarantee payments
  • Honoraria pay
  • Inducement payments

Employee deductions include:

  • Income tax
  • National insurance
  • Student loan repayments
  • Pension contributions
  • Payroll giving
  • Child maintenance