Easily manage employment in United Kingdom

Payroll services in the United Kingdom

The United Kingdom (UK) has a well-regulated payroll system with key industries in finance, technology, healthcare, and manufacturing. Employers in the UK must comply with national labor laws, tax regulations, and social security contributions to ensure proper payroll management. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in the United Kingdom

Employers in the UK must adhere to national payroll regulations concerning wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: The UK has a National Minimum Wage (NMW) and a National Living Wage (NLW) based on age groups. As of April 2024, the NLW for workers aged 21 and over is £11.44 per hour.
• Payroll frequency: Salaries are typically paid monthly, though some employers use weekly or biweekly schedules.
• Standard working hours: The normal workweek in the UK is 40 hours, with a legal maximum of 48 hours per week, unless the employee opts out.
• Overtime: There is no statutory overtime rate, but employers must pay at least the minimum wage for extra hours worked.

Taxation and social security contributions

• Personal income tax: The UK has a progressive income tax system, with rates for the 2024/25 tax year as follows:
• 0% (Personal Allowance): Up to £12,570
• 20% (Basic Rate): £12,571 – £50,270
• 40% (Higher Rate): £50,271 – £125,140
• 45% (Additional Rate): Above £125,140
• Employer contributions:
• National Insurance (NI) Contributions: Employers pay 13.8% on earnings above £9,100 per year.
• Pension Contributions: Employers must contribute at least 3% to a workplace pension under the auto-enrolment scheme.
• Employee contributions:
• National Insurance (NI) Contributions: Employees pay 8% on earnings between £12,570 and £50,270 and 2% on earnings above that.
• Pension Contributions: Employees must contribute at least 5% under auto-enrolment.
• Corporate tax: The corporate income tax rate in the UK is 25% for companies with profits over £250,000 and 19% for smaller businesses.
• Tax reporting: Employers must file payroll taxes and social security contributions with HM Revenue & Customs (HMRC) via the Pay As You Earn (PAYE) system.

Payroll compliance in the United Kingdom

• Employment contracts: UK law requires written employment contracts outlining salary, working hours, and benefits.
• Payroll deductions: Employers must ensure proper deductions for income tax, National Insurance, pensions, and other benefits.
• Holiday entitlement: Full-time employees are entitled to at least 5.6 weeks (28 days) of paid leave per year, including public holidays.
• Employers must stay updated on changes to UK labor laws, tax rates, and pension requirements to avoid penalties.

Run payroll in the United Kingdom with Remote

Managing payroll in the UK requires careful attention to tax laws, employment regulations, and social security contributions. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.