Getting your payroll done, and all your accounts organised can already be a time-consuming task, and there’s nothing worse than getting yourself all prepared and ready, and then finding a ton of jargon and confusing payroll terms in front of you that you then have to look up and decipher what is actually being said.
Don’t despair! We’re here to help, with a handy quick guide to some of the most common terminology and acronyms. We’ll help you blast that jargon away, so you can get on with what you need to do.
Some of these terms you’ll probably be familiar with, but in the interest of completeness, we’re going to include them anyway!
PAYE: Pay as You Earn – PAYE is a method of paying Income Tax and National Insurance Contributions.
The acronym might be used as “Registering for PAYE” which is referring to the process of setting up the scheme for the business with the Tax Office.
It could also be used as, “Making your PAYE payments” – which refers to paying in the tax and National Insurance for the scheme.
Or it could possibly be used as, “I’m on PAYE” – which refers to an employee stating that they are earning their wages under the PAYE method.
HMRC: His Majesty’s Revenue and Customs (aka “The Tax Office”) – HMRC is the recognised acronym for the Tax Office, although for some people “Inland Revenue (IR)” is still the first thing they think of when they hear tax office, even though that name was replaced way back in 2005!
When you see the term HMRC, it may be referring to the office in general, different unspecified departments, or needing to contact someone working there.
NICs and NI: National Insurance Contributions and National Insurance – National Insurance is what you pay to build up entitlement to some state benefits, including your pension. NICs are the payments that are made to HMRC which are then credited to each individual’s NI.
CIS: Construction Industry Scheme – This is a scheme where registered contractors can deduct money from subcontractor payments and forward it directly to HMRC as an advanced payment for tax and NI.
Now we’re going to move on to the more complex acronyms and jargon that you’d expect to see in your payroll:
RTI: Real Time Information – This means that the data is being collected and / or submitted ‘as it happens’ (in real-time).
FPS: Full Payment Submission – This refers to submitting what employees are paid – how often you send this will depend on whether they’re weekly, fortnightly, or monthly paid. A FPS is expected to be sent to HMRC either on, or the day before you pay your employee.
EPS: Employer Payment Summary – This shows whether you’ve had any recovery from statutory payments or other deductions and would be submitted either monthly or quarterly to HMRC, depending on how you pay. An EPS informs HMRC that you have a reduction in liabilities.
SMP: Statutory Maternity Pay – This is leave (up to 39 weeks) for pregnant individuals. There are certain qualifications that an individual needs to meet to qualify for SMP.
SSP: Statutory Sick Pay – If an employee is off sick, they may be entitled to claim SSP.
SRP: Statutory Redundance Pay – This can be paid out to employees under certain circumstances, and at certain levels, is tax and NI free. The amount paid out will depend on the employee’s age and length of employment.
BACS: Bankers Automated Clearing Services – This is the electronic processing of financial transactions and makes use of a “BACS system”. These payments generally take three working days to clear.
CHAPS: Clearing House Automated Clearing Service – This is a same-day payment system, and is generally used for high value transactions, or payments on a tight schedule.
Auto Enrolment – This is a specific process that relates to employees and pensions. The general idea is, that when an employee pays into a pension fund – their employer pays in as well. There are set guidelines and requirements related to this process and making payments.
Gross Pay – This is the total amount an employee has received before any tax or other deductions have been made.
Net Pay – This is the total take-home amount, after tax, NI, and any other deductions have been made.
Tronc – This is a type of payroll that has been arranged separately to distribute tips, gratuities, and service charges, you typically see this used in restaurants, hotels, and other hospitality businesses. The person who runs the Tronc is called a “Troncmaster” and must run the payroll and report the information to HMRC.
Does this cut through the clutter a bit? If you’re looking for help and advice with your payroll, or you’d like to leave it to someone you can trust – you should get in touch! Contact us today, and let’s get your payroll efficient, optimised, and stress free!
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