Additional Statutory Paternity Pay.
This is used when all income is taxed at the Basic Rate.
In payroll, a cumulative amount is a total since the start of the tax year (6th April). For example, if an employee is paid £1000 at the end of April and £1000 at the end of May, the cumulative pay at the end of May will be £2000. PAYE Income Tax is normally calculated on a cumulative basis, by starting with the cumulative pay and working out what the cumulative tax should be.
Employer's Contracting-Out Number. For contracted out pensions.
Gross Pay is the total pay before taking off tax, national insurance and any other deductions. Gross Pay can include salary, overtime, holiday, sick pay, bonus, commission and other payments.
H.M. Revenue & Customs (or HMRC) was created by the merger of the Inland Revenue and H.M. Customs and Excise in 2005. It deals with the collection of tax, national insurance contributions and VAT.
Periods of incapacity to work (PIWs) are linked and treated as one PIW if the gap between them is 8 weeks or less. This means that if the qualifying days have already been served then they do not need to be served again within this same 8 week period.
This is the level that an employee's average weekly earnings must reach for them to be entitled to statutory pay.
Net pay is the amount of money actually paid to the employee on pay day. It is the gross pay, minus all of the deductions.
National insurance contributions.
This indicates that the employee should not be paying tax on their income.
Ordinary Statutory Paternity Pay.
A P45 is a form that is filled out by an employer and given to an employee when they leave. The employee should then give the P45 to their new employer when they start a new job. The new employer uses the information from the P45 to ensure that the correct amount of tax is deducted.
Prior to the introduction of Real Time Information, if a new employee did not have a form P45, the employee would fill out a form P46 instead. This has now been replaced by the starter checklist
The P14 form is an end of year document giving details of the employee, NI and PAYE deductions for tax years up to 2012/13. For the tax year 2013/14, this is no longer needed, because of the introduction of Real Time Information.
At the end of each tax year, employers must give a P60 to each of the employees who were working for them at the end of the year. A P60 includes totals of the pay, tax and national insurance accumulated during the tax year.
For tax years up to 2012/13, the P35 was an end of year report containing the total of PAYE and NI (employee's and employer's) for the tax year. It also gave details of any SSP and SMP paid to employees. For the tax year 2013/14, this is no longer needed, because of the introduction of Real Time Information.
This shows the pay and deductions for one employee over the tax year so far.
Pay-as-you-earn (or PAYE) is the system used in the UK for deducting income tax from an employee's pay. Each time the employee is paid, their employer is required to calculate and deduct income tax and national insurance.
For an employer, payroll is the financial record of salaries, bonuses and deductions, including tax and national insurance contributions. A payroll system enables the employer to organise these financial records, to calculate the deductions and to generate the appropriate paperwork.
A payslip must be given to the employee each time they are paid. It can be on any type of paper or can be given to the employee electronically (assuming they are able to print it).
The payslip must show
The scheme under which an employer may be able to recover some, or all of the SSP they have paid to employees in a tax month. This was abolished in April 2014, so employers can no longer recover any SSP.
These are usually the days of the week that your employee normally works. You can decide not to use the contracted working days if, for example your workforce operates on a varied work pattern each week.
Statutory Maternity Pay
Statutory Sick Pay (SSP) should be paid to all employees who are off work through sickness and who qualify for SSP.
This means it is decided or controlled by law.
Each employee has a tax code to specify the way that PAYE income tax should be calculated and deducted from their wages. If an employee has more than one job, they can have a different tax code for each. For further information, see our Guide to Tax Codes.
The Upper Accrual Point. This is a threshold for the calculation of both state second pension and contracted out pension.
SSP isn't payable for the first three days in a period of incapacity to work. These are known as waiting days.
If an employee does not have a form P45 or has lost it, the employer should ask the employee questions about their present circumstances. HMRC have provided a starter checklist which can be used for this purpose.
From April 2013, almost all employers must send information to HMRC each time they pay their employees, using a Real Time Information submission. There are several types of Real Time Information submission, which are used for different purposes. The most common one is a Full Payment Submission (FPS), sent every time a payment is made to employees.