From P45s to RTI Learn about vital payroll terminology
Gross pay/net pay Gross pay is the total before deductions, and can include salary, as well as any overtime, bonuses, commissions etc. Net pay is what the employee receives after deductions: their take home? pay. Deductions These are payments deducted from an employee’s salary. They can include tax, National Insurance, student loan repayments, pensions and child maintenance. P60s A P60 shows the tax paid on salaries in a tax year. Employees must be issued a separate P60 for each of their jobs after the tax year has ended (by 31 May for this year). The forms can be produced using payroll software, or through ordering them from HMRC. You can’t download blank versions. P45s A P45 is a form issued to employees when they stop working for an employer. It shows how much tax they have paid on their salary up to that point in the tax year. RTI Real Time Information means submitting information to HMRC in real time, every time employees receive their salaries. It means updating HMRC with PAYE information every time you pay staff not just once at Year End. It doesnt change how PAYE is calculated, just how it is reported. Auto-enrolment Every business is required to enrol eligible staff members into a workplace pension scheme. They are also required to contribute towards it. There is accounting software that can assist employers with this. If all of these terms sound daunting to you fear not. There’s plenty of technology you can utilise to take you through it in baby steps. However, it has got to be done, so don’t ignore it and hope it will go away. Start looking for the software that’s the right fit for your business. To find out more about payroll terminology, click here.