Can I ask quick accounting PAYE question?

[Jamster123]

The initial message was deleted from this topic on 13 August 2015 at 21:18

[Devilstreak]

In short (typing on phone) the accountant is correct.

The 300 figure you have (1000-700)only takes into account the tax and EMPLOYEES national insurance stopped.
There is also EMPLOYERS national insurance that you owe which is a similar figure

[jammy_basturd]

There are some useful payment calculators on the HMRC website: https://www.gov.uk/government/collections/how-to-m...

[anonymous-user]

roughly roughly employers NI is 13.8%

so that would be £138 per week for someone paid £1k per week

£284 + £138 = £422 per week

some months have 5 weeks in them in weekly payroll terms (May for instance)

Edited by anonymous-user on Wednesday 13th May 21:19

[Simon Brooks]

Yep as above you dear sir get the honour of paying an additional tax (employers NIC) for the privilege of having employees, congratulations !!!!

[red_slr]

Are you not using real time?
It works it all out for you.

[Eric Mc]

I would have thought that the total cost of hiring somebody should be looked at before agreeing a Gross Salary. Whatever Gross Salary you offer somebody, you should always factor into your "affordability" review the fact that you will normally be required to pay Employer's NI on top of the Gross Salary amount.

This website is useful for doing some quick sums of a "what if" nature.

http://www.listentotaxman.com/

[toohangry]

I find it mildly terrifying that, as an employer, you're not aware of ErNI.

[red_slr]

I don't know how big your business is but mine is fairly small. Generally around 6 people, sometimes 7 or 8.
It takes my wife from 9am till 3pm each day to do the admin (accounts, VAT, HMRC, invoices, bank runs etc).
During our quiet time (Oct - Feb) she might drop back to 2 or 3 days a week.
But the rest of the year its basically a full time job.

At the year end there is usually a period where she takes 2 weeks just to do the year end and does nothing else.
This then means the next 2 weeks after that there is twice the work to do..

[Eric Mc]

I think you should consider sub-contracting the Salary/PAYE admin to a 3rd party. There are quite a few payroll bureaus out there who would be able to do this for you.

[bad company]

Eric Mc said:

I think you should consider sub-contracting the Salary/PAYE admin to a 3rd party. There are quite a few payroll bureaus out there who would be able to do this for you.

Good advice. These guys are not expensive and know all the ins & outs.

[red_slr]

I am very lucky in that my wife was a trainee solicitor when we decided to go into business so she has a methodical mind and she never forgets anything!! I am good with IT and customers and general stuff and she always says she would be scuppered without me as she is very poor on IT and our website but the reality is she is the key person in the business as if she really wanted to learn the IT she could, but I don't have the mind for admin, accounts, VAT, HMRC etc etc. Defo needs a specific person to be good at it.

[Eric Mc]

Being smart and methodical is not enough. You need people who know and understand the regulations. That is something being smart and methodical doesn't give you - unless you go to the trouble of learning the regulations as well - which are extensive and complex.

[Eric Mc]

Payroll is generally straightforward PROVIDED the employee's circumstances stay straightforward. That is not always the case and it is something you have no control over.

[red_slr]

Twaddle. First layer is in house, second is our accountant. I am pretty sure he knows what he is doing for the moments when we don't!

[Eric Mc]

Obviously not twaddle as you do have the "3rd party expert" on hand if you need specialist advice. That was the point I was making. A "lay person" working on their own - even a very smart one - still needs outside assistance from time to time.

PAYE and payroll is "Income Tax" mixed in with loads of other additional factors - such as RTI rregulations, NI rules, student loan repayments, tax credits, maternity/paternity/sick leave, holiday entitlements, redundancy rules, employee rights, employment law etc etc.

[bad company]

red_slr said:

Twaddle. First layer is in house, second is our accountant. I am pretty sure he knows what he is doing for the moments when we don't!

All very well when it's simple. When you get maternity , paternity , holiday pay & all sorts of other stuff it can become more complex. Yes an accountant can do it all at a price.

Still if you think that's all 'Twaddle'.

[red_slr]

I think you both misunderstand. I am saying Eric is talking twaddle.
Yes the regulations are complex. But that's no reason to say ohh you cant *possibly* run your own accounts... course you can. We do 99% of the work in house. In fact, I cant remember the accountant coming back to us in the last 5+ years saying something is wrong with our PAYE. So, with respect, what you are saying to the OP is pay some dude a load of money for something you can do yourself. When in reality you can do all the donkey work and leave any complex stuff to someone you trust. Which is what I do, as I said.

[Eric Mc]

I wasn't talking about accounts.

I was talking about payroll and PAYE.

Also, I didn't say savvy people couldn't run PAYE - but if they were running the payroll matters, they would need good backup from someone who was au fait with payroll matters.

And there are many good accountants out there who are not up to speed on payroll - it has become a very specialist and tricky area over the years.

Edited by Eric Mc on Sunday 17th May 13:08