Quick Overview

Payroll is the process of paying employees accurately and on time, while correctly deducting and reporting Income Tax, National Insurance and any other required deductions to HMRC.

Who This Guide Is For

This guide is for business owners running payroll for the first time, or wanting a refresher on the basics.

What Payroll Involves

  • Calculating gross pay for each employee each pay period
  • Deducting Income Tax and National Insurance via PAYE
  • Accounting for pension contributions under auto-enrolment, where applicable
  • Reporting pay and deductions to HMRC on or before each payday
  • Paying employees their net pay and HMRC any deductions owed

Getting Payroll Right

Most businesses use payroll software to handle the calculations and HMRC reporting automatically, reducing the risk of errors. Keeping accurate employee records — tax codes, starter/leaver dates, pay history — makes each pay run smoother.

Important Considerations

Payroll errors can affect both the business and its employees, so accuracy matters. Auto-enrolment pension duties apply to most employers, even those with just one employee, and have their own separate compliance requirements.

This guide provides general information only and is not personalised payroll advice.