Payroll for beginners
Payroll for Beginners – What Every Employer Needs to Know
If you are employing staff for the first time, either through your company or club, payroll can appear daunting. There are forms to file, deductions to calculate, and reporting obligations to meet. But with a reliable payroll partner, the process becomes clear, consistent, and compliant. Effective Payroll Solutions supports over 250 employers — from single-director companies to social clubs and charities — making payroll smooth, secure, and efficient from the outset.
Each time you pay an employee, you must follow a sequence of tasks. These include recording the employee’s pay, calculating tax, National Insurance, and any other deductions, issuing a payslip, and reporting to HMRC via the RTI (Real Time Information) system. If you do not pay anyone in a given period, an Employer Payment Summary (EPS) must be submitted instead. Missing these obligations or filing them incorrectly may result in penalties.
You must register with HMRC as an employer before you begin. PAYE becomes mandatory if any employee earns above the Lower Earnings Limit — £123 per week in 2025/26. You’ll also need payroll software that can submit Full Payment Submissions (FPS) on or before each payday. EPS handles all this for you — ensuring submissions are accurate and timely, every period.
You will need to collect the following information for each employee: full name, address, date of birth, National Insurance number, and their start date. This is usually provided via a P45 or the HMRC Starter Checklist. We ensure that all employee records are set up correctly to avoid tax code errors and ensure correct pay from day one.
Statutory payments, such as sick pay and parental leave pay, must be processed accurately. Statutory Sick Pay is currently £116.75 per week. Maternity and Paternity Pay are both available at the statutory rate of £184.03 per week (2025/26), following initial full-pay periods where applicable. EPS will ensure correct application and advise on your ability to reclaim payments from HMRC where applicable.
All employers are also required to comply with auto-enrolment duties. We manage assessment, communications, and integration with your pension provider — ensuring the legal minimum contributions are applied and records are retained.
Student loan deductions can be complex, but EPS will ensure the correct plan is applied. For the 2025/26 tax year, deductions apply as follows:
- Plan 1: £24,990/year (9%)
- Plan 2: £27,295/year (9%)
- Plan 4 (Scotland): £31,395/year (9%)
- Postgraduate Loan: £21,000/year (6%)
Running payroll isn’t just about pressing a button. It’s about accuracy, compliance, and safeguarding your business. At EPS, we bring over 50 years of combined payroll experience, supported by cloud-based software, CIPP-qualified staff, and HMRC-recognised processes. We’re here to make payroll one less thing for you to worry about.