CASH recommends that small charities and community groups use a payroll service rather than undertaking the work in-house. We encourage groups currently doing their own payroll to switch to a payroll service.
HMRC have published the rates and thresholds for employers: 2018 to 2019: these are for use when you are running payroll or provide expenses and benefits to your employees.
Even if you use a payroll service, your organisation is ultimately responsible for keeping records. These include:
- What you pay employees and the deductions you make
- Reports and payments you make to HM Revenue and Customs (HMRC)
- Employee leave and sickness absences
- Tax code notices
- Taxable expenses or benefits
- Payroll Giving Scheme documents, including the agency contract and employee authorisation forms
Payroll services will be familiar with the HMRC record-keeping requirements which is another good reason for using one.
Your records must show you’ve reported accurately, and you need to keep them for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure you’re paying the right amount of tax.
If you don’t keep full records HMRC may estimate what you have to pay and charge you a penalty of up to £3000.
Your organisation’s auditor/independent examiner will also want to see that payroll records are being kept.
Here is a list of the onerous tasks associated with running payroll. Note that when using a payroll service you will still have to collect information from staff to pass to the service and work closely with the service on an ongoing basis. CASH and other services will be able to guide you on what you need to do. Like keeping records, as an employer, you are still legally responsible for making sure everything is done.
- For new organisations, it requires recruiting suitably qualified/experienced staff and having a treasurer and other trustees who are fully aware of their payroll responsibilities
- For new and existing organisations ongoing training on HMRC requirements and procedures and the organisation’s payroll responsibilities
- Registering for HMRC’s PAYE online service to take tax and national insurance (NI) deductions and perform other payroll functions
- Install and run payroll software on your computer (some can be downloaded from HMRC) and provide proper training for staff
- Register new employees in line with HMRC’s Starter checklist
- Enrol employees in a workplace pension*
- Registering employee’s student loans and making the correct arrangement for payment
- Run monthly payroll from 5th each month (other key dates below): recording pay including statutory pay (maternity etc) and benefits and expenses, making deductions, producing payslips, reporting HMRC Full Payment Submission (FPS), reporting HMRC Employer Payment Summary (EPS), paying HMRC, sending an FPS after payday and reporting staff changes
- Make annual Full Payment Submission
- Paying HMRC monthly: CASH uses BACs as do other payroll services, but you can use direct debit, or pay at your bank or a post office
- Make sure you’re paying the National Minimum Wage
- Payroll taxable benefits and expenses, alternatively send an annual paper form P11D, even if you payroll benefits and expenses you’ll still need to send an annual P11D(b)
- Working out tax codes for late P45s
- Make a claim for Employment Allowance (reduction in NI bill)
- Administering statutory sick pay, maternity pay and paternity pay
- Issuing a P60 annually to employees and a P45 when people leave
- Ensure that self-employed workers are genuinely self-employed otherwise you may be eligible for paying their tax & NI
- Ensure that if volunteers are given any expenses which are taxable, the tax is paid (HMRC defines “trivial” benefits as worth less than £50 and so not taxable, that means some childcare and things like a computer to use from home could be taxable), this could be paid monthly through payrolling, annually through a P11D/P11D(b) or through a PAYE Settlement Agreements
- Plus more!
*Employers have to provide a workplace pension for eligible staff. The HMRC website gives guidance to “automatic enrolment“. You must pay at least 1% of your employee’s “qualifying earnings” into your workplace pension. This will rise to 2% in April 2018 and to 3% in April 2019. The Pensions Regulator has tools for employers.
Administering workplace pensions are another good reason for using a payroll service.
There are penalties for performing many HMRC-related tasks late ie. not meeting payment deadlines.
The above list is not exhaustive. Your organisation is responsible for everything from informing HMRC of an employees death to whether they change gender and the rules concerning things like salary sacrifice and benefits and expenses are highly detailed. A salary sacrifice is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit ie. childcare vouchers.
Financial health check
CASH firmly believes groups should take advantage of an experienced payroll service.
If you want to go ahead and undertake payroll alone the HMRC has a general introduction to payroll and detailed guides to payroll. These pages will show you where to start – but the appropriate response may be, where do you start?
If you are struggling with your current payroll CASH could help with a financial health check. This would look at a range of your organisation’s procedures or concentrate specifically on the payroll. Get in touch: phone us for more information (020 8969 0747) or email email@example.com
Monthly payroll dates
Tax months run from the 6th of one month to the 5th of the next.
On or before the employee’s payday, report their pay and deductions to HMRC in a Full Payment Submission (FPS).
In the next tax month (starting on the 6th)
You can view what you owe from your FPS online from the 12th.
Claim any reduction on what you’ll owe HMRC (for example statutory pay) by sending an Employer Payment Summary (EPS) by the 19th.
View the balance of what you owe in your HMRC online account, within 2 days (or by the 14th if you sent the EPS before the 11th).
Pay HMRC by the 22nd (or the 19th if paying by post) – you may have to pay a penalty if you don’t.
|What you need to do||When|
|Send your final payroll report of the year||On or before your employees’ payday|
|Update employee payroll records||From 6 April|
|Update payroll software||From 6 April|
|Give your employees a P60||By 31 May|
|Report employee expenses and benefits||By 6 July|
Contact us for more information about CASH running your payroll (020 8969 0747) or email firstname.lastname@example.org
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