Those of you who have more than a couple of employees and run your own payroll will probably be finding the current situation a bit of a minefield. Not only are we starting a new tax year this month with its changes in National Insurance contributions, changes to student loan thresholds, a change to they way holiday is calculated for irregular workers, minimum and living wage increases and pay rises, employers are also having to cope with unknown terminology - furlough - and the HR and pay implications of that.
I have run a payroll bureau for over 16 years and I have never before known there to be so many payroll implications at one time. It is certainly challenging for us even though we have many years of experience, so I imagine it could be overwhelming for small business owners running their own payroll. Three weeks ago we were introduced to the word "furlough" which means to temporarily lay off an employee but keep them on the payroll so that they can return as soon as the business can begin trading as before. Since then gradually more information has been made available by HMRC about how this is to be applied in a business. This includes who it can be applied to, for how long and the grant which is being made available to employers to cover 80% of the salary of the furloughed employee.
Over these three weeks I have sent out several updates to our payroll clients explaining the current situation and the new information which has emerged but I know that many have still wondered whether it applied to them and if so, more importantly, how do they claim the grant.
HMRC have confirmed that payroll agents will be able to submit the claim for the grant which makes sense as they will be the ones doing the complex April pay calculations and I know it will be a relief for the employers we work with.
Outsourcing your payroll to a bureau which has experienced payroll administrators is certainly advantageous in the current situation. Our clients have someone to talk through the rules with; they receive guidance on how to communicate the situation with their employees; they can leave it to us to calculate the pay for employees who have been self-isolating for 2 weeks, but who worked one week and then were furloughed but of course also took two days holiday due to Easter; and they don't even have to worry about working out what is due to them and submitting a claim to HMRC.
Of course this is a very unusual and one-off situation but every month that we do payroll we have to deal with complexities. Payroll is not just about entering pay and pressing a button to produce payslips and submit the information to HMRC. An experienced payroll administrator will have a wealth of knowledge which they can apply when dealing with more unusual situations and which helps them recognise when something needs to be done differently. Your payroll may be straightforward - just a couple of employees who earn the same every month - but can you be sure that you are making the correct deductions for tax, NI and pension contributions? We have taken on many payrolls where pay and deductions have not been calculated correctly. Would you know how to apply an Attachment of Earnings Order or calculate statutory sick pay. Payroll software can do all this for you of course but unless you have an understanding you will never know whether what it produces is correct. And we know that it isn't always right because we have to override what it calculates on occasion.
Perhaps you have never considered outsourcing your payroll because you think it will be expensive. But have you found out how much it will cost? A few years ago I was contacted for a quote to provide payroll training as the business owner wanted to do the payroll. Payroll is too involved for us to provide a one-off training session as we would if training someone to use accounting software. I asked how many employees she had and then told her how much it would cost for us to do it every month. The cost was equivalent to the cost of the payroll software so the decision to outsource was immediate.
Outsourcing has many advantages, not least of which is time saving. Why spend time doing something which is not your skill? When you outsource your payroll all you need to do, once your payroll is set up, is to provide details of changes to the payroll (unpaid leave, sickness absence, overtime, bonus, etc) and the rest is done for you.
We work with employers who have between 1 and 50 employees and as well as dealing with their payroll we also manage their auto enrolment communications and contributions. From charities to nurseries, from service trades and manufacturing to garages, we have experience of most types of employer.
Contact us on 01722 341820 to find out more about outsourcing your payroll and auto enrolment and find out how passing on a time consuming role in your business can save you time, give you peace of mind and be cost effective too.