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PAYE (Pay As You Earn):
The UK operates a PAYE system, which means that employers are responsible for deducting income tax and National Insurance contributions (NICs) from employees' wages and paying them to HM Revenue and Customs (HMRC) on behalf of the employees.
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National Insurance:
in addition to income tax, National Insurance contributions (NICs) are also deducted from employees' wages. NICs go toward funding state benefits and pensions. Employers are also required to make their own NIC contributions on behalf of their employees.
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Payroll Frequency:
Employers in the UK typically process payroll on a monthly or weekly basis, although other frequencies are also possible. The payment schedule should be clearly communicated to employees.
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Payslips:
Employers must provide employees with itemised payslips that detail the gross pay, deductions, and net pay. Payslips can be provided in a printed or digital format, but employees must have access to view and print them.
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Statutory Payments:
Employers may need to provide statutory payments to employees, such as Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), and Statutory Adoption Pay (SAP). These payments are subject to certain eligibility criteria and have specific rules for calculation and duration.
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Year-End Reporting:
At the end of each tax year (which runs from April 6th to April 5th), employers are required to provide employees with a P60 form that summarises their earnings and deductions for the year. Employers must also submit a year-end report to HMRC.
Pension Auto-enrollment:
Under the automatic enrolment scheme, employers must enrol eligible employees into a qualifying workplace pension scheme and make contributions on their behalf. The contribution rates are set by the government and periodically reviewed.
It's important to note that payroll processes and regulations can change, so it's advisable to consult with a payroll specialist, use payroll software, or seek professional advice to ensure compliance with the latest requirements.