What an Outsourced Payroll Service Covers
Running payroll correctly requires accurate tax code management, National Insurance calculations, Real Time Information submissions to HMRC on or before each pay date, statutory payment administration, pension contribution processing, and the production of payslips for each employee. When the payroll is also the function most likely to attract an HMRC compliance review, getting it right consistently is not optional.
Our outsourced payroll service covers the full payroll function for businesses of any size. We handle the calculations, submissions, and payslip production each pay period, leaving the business owner free to focus on the work that generates revenue rather than the compliance function that has to run alongside it.
PAYE and RTI: The Ongoing Obligations
Every pay period, a Full Payment Submission must be sent to HMRC on or before the date employees are paid. Late FPS submissions attract penalties after a number of default occurrences in a tax year, and the penalty is calculated per employee per late submission. Managing this reliably across multiple pay frequencies, weekly, fortnightly, and monthly, requires a disciplined process and a payroll calendar that accounts for bank holidays and pay date changes. HMRC’s detailed guidance on payroll obligations is on the PAYE for employers page.
Where no payments are made in a period, an Employer Payment Summary must be submitted to HMRC to confirm the nil payment. Failing to submit an EPS when there are no employees being paid in a period still triggers a potential penalty if HMRC is not informed. These submissions are handled automatically as part of our payroll service.
Auto-Enrolment and Pension Processing
Employers are legally required to automatically enrol eligible employees into a qualifying pension scheme and make employer contributions of at least three percent on qualifying earnings. The administration of auto-enrolment, including assessing eligibility, managing opt-outs, and submitting contribution schedules to the pension provider, runs alongside the payroll and must be completed on the same cycle. The Pensions Regulator oversees compliance and can impose fixed penalties for late enrolment, missed contributions, and failure to re-enrol every three years. Full information is at The Pensions Regulator website.
Our payroll service includes auto-enrolment administration for clients using our recommended pension providers. Where a client has an existing pension arrangement with a separate provider, we process the contribution data and provide the submission files in the format required by that provider.
Payroll for Directors and Small Teams
Director-only payrolls are one of the most common payroll arrangements we manage. A sole director paying a salary below the National Insurance threshold has a simple payroll calculation but still requires RTI submissions to HMRC each month. The Employment Allowance is not available to single director companies with no other employees, which affects the NI calculation for any salary above the secondary threshold.
If you employ a small team and find payroll management is taking more time than it should, or if your payroll is currently managed by someone without dedicated payroll training, our payroll services provide a reliable, professionally managed alternative. Call 0161 531 0087 to discuss your payroll requirements.
Payroll can also be included as part of our broader outsourced bookkeeping service if you want the payroll and bookkeeping managed together under a single fixed monthly fee.
About the Author
Stuart Kerr is Managing Director of Bookkeeping Packages Ltd, an outsourced bookkeeping service supporting UK small businesses and accountancy practices. With over 20 years of bookkeeping experience, Stuart specialises in helping businesses maintain accurate records and management accounts. Stuart is a bookkeeper, not a regulated financial adviser. Nothing in this article constitutes tax or financial advice. Call 0161 531 0087 or visit bookkeepingpackages.co.uk.
The information in this article is provided for general guidance only. Stuart Kerr is a professional bookkeeper, not a regulated financial adviser. This content does not constitute tax or financial advice. For advice specific to your circumstances, please consult a qualified accountant or tax adviser.
By Stuart Kerr, Managing Director, Bookkeeping Packages Ltd
The Cost of Getting Payroll Wrong
Payroll errors have consequences that extend beyond a corrective submission to HMRC. An employee who receives an incorrect payslip or an underpayment loses confidence in the business’s administration, which affects morale and, in some cases, creates an employment law issue if the error relates to statutory minimum wage compliance. HMRC penalties for repeated RTI submission errors accumulate over the tax year and are calculated per employee, meaning a small team with consistent errors can generate a significant penalty before the year-end reconciliation identifies the problem.
The most reliable protection against payroll errors is a process that is managed by someone with dedicated payroll knowledge and the systems to apply HMRC’s rates, codes, and thresholds accurately at each pay run. For businesses without an in-house payroll specialist, outsourcing the function to a professional service achieves this at a fraction of the cost of an additional employee.