Information on: Setting up a payroll

It's important when employing someone or if you are a Director of a Limited Company and want to pay yourself a salary, that you set up a payroll system. The following steps should help you understand the things an employer must do when dealing with HMRC:

Search the website for details of free and paid-for software tested and recognised by HMRC
Free payroll software is suitable if you have fewer than 10 employees.
Choose the software that has the programs that you need, then follow the supplier’s instructions to download and install
Before running your payroll you need to set it up with your employer information including:

PAYE reference number
Accounts office number
Employees details
You will also need your PAYE log in.

Depending on how you pay your employees you may also need:

Monthly salary
Weekly wage
Hourly pay rate
The software that you download will calculate an employees:

Tax deductions
NI deductions
Student loan deductions
Employer NI
Once this is done the following needs to be done:

You must send an FPS (Full Payment Report) before every single payday.

An FPS tells HMRC:

What to pay your employees
Total to pay to HMRC
Any new starters and leavers the company has
You may have to pay a penalty if an FPS report is not sent out in time.


There are no employees to be paid for a particular month
You need to reclaim statutory payments
Or you need to claim employment allowance
Instead of an FPS you will need to send an EPS (Employment payment summary) to HMRC.

Each software will have a help guide for further queries check this.

Source: GOV.UK

Contains public sector information licensed under the Open Government Licence v3.0.

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