Payroll

As a UK business grows, it may reach the point of wanting to begin operating in a different country.

While that might make someone think of spreading out operations to a distant shore, expanding into one of the UK countries is often a smart business move as it involves an expanded consumer base with relatively small expansion costs.

However, as much as the UK operates as a unified country on the world stage, the differences between payroll compliance in England, Scotland, Wales, and Northern Ireland should not be ignored as this could see your business becoming noncompliant.

 What are the main differences in payroll between the UK countries?

Each of the devolved nations carries its own approach to payroll that can catch uncertain businesses off guard.

If a business is operating in Wales, it must adhere to guidelines imposed by the Welsh Language Measure 2011.

This regulation requires public bodies, and some private employers, to translate core employment documents when they are sent to multiple people or at the request of an individual.

As payslips count as employment documents, provisions will need to be made to ensure that Welsh language options are available for any employees operating in Wales.

When starting operations in Wales, it is imperative to have a system in place to provide Welsh language payslips from the outset as failure to do so may risk a business becoming noncompliant.

For businesses operating in Scotland, there comes a challenge around paying employees.

While Scotland technically adheres to the UK’s National Minimum Wage, it is becoming the norm to follow the Real Living Wage campaign.

This sees a higher rate of pay for employees, with workers receiving £12.60 per hour rather than £12.21 from accredited Living Wage employers.

While there is no obligation to be part of this, it is imperative for any business expanding into different territories to be aware of cultural expectations.

Failure to keep pace with this may result in recruitment challenges as potential employees may feel undervalued by businesses.

In Northern Ireland, hybrid working tax reliefs are more responsible for payroll processing than in other parts of the UK.

Payroll teams must ensure that any tax-exempt reimbursements are recognised and documented to avoid unnecessary tax deductions.

How to stay payroll compliant across the UK?

Unlike when a business expands overseas, the main rules and regulations are the same between the UK countries.

However, understanding the nuances of the systems that reflect the unique culture of each country will ensure that a growing business remains compliant wherever it operates.

It is important for a business to be aware of expectations, and professional accountants can help provide guidance in this regard.

Accountants should have a good working knowledge of the various payroll requirements throughout the UK and are best positioned to assist businesses as they expand.

Businesses risk fines and reputational damages by not adhering to payroll compliance, so should welcome the advice and guidance of accountants on the matter.

To stay compliant with the latest payroll regulations across the UK, speak to our team today.

Every year, the Chartered Institute of Payroll Professionals (CIPP) compiles a survey report determining the latest trends in payroll.

When this is published, it provides a valuable moment of reflection with a chance to consider how the future of payroll can move towards greater compliance.

Overall compliance is quite a mixed picture, so we are going to take a deeper look at the CIPP survey report.

Where has compliance improved?

Since 2019, all employees have been entitled to itemised payslips.

This was meant to empower employees to understand exactly how the fruits of their labour were being divided to avoid any confusion or friction.

As of the latest CIPP report, compliance with this has now reached 91.16 per cent.

While this is a good score, it is disconcerting that, after more than half a decade, compliance is still not absolute.

In other good news, compliance around Full Payment Submission (FPS) for payday reporting has increased by more than 10 per cent in the last year.

The previous survey listed this compliance as only being around 58 per cent, so while it is a relief to see improvement, there is still a long way to go.

A vast number of businesses may face repercussions from not fulfilling these compliance requirements.

If the recent changes to Companies House are anything to go by, there is a current trend of cracking down on noncompliance.

As this is an area where many businesses still seem to struggle, it is worth any payroll advisor giving particular focus to improve the rates of compliance in this regard.

Knowing that this may be something that clients struggle with may allow for conversations to take place to determine the extent of the knowledge concerning this.

Businesses are risking fines from HM Revenue and Customs (HMRC), so accountants can work alongside them to improve the overall quality of payroll compliance.

Where has compliance fallen?

Disturbingly, the CIPP report does not chart entirely positive trends.

Compliance on holiday pay reference periods fell by 6.8 per cent.

This may be because of the nuances and complexities that surround holiday pay, with many businesses not able to accurately determine their full responsibilities.

This is resulting in diminishing rates of compliance and is a cause for concern for payroll experts.

Compliance training and raising awareness of the rules around holiday pay will help stem this issue before it becomes a greater problem.

While not a compliance issue, a disturbing 57.57 per cent of employers do not use any tools to help their employees understand their payslips.

This is a missed opportunity to help employees feel more connected to their wages and take greater control over their finances.

Payroll is not simply about ticking boxes for compliance, but should be about protecting and empowering employees.

There is scope for accountants to introduce best practices to businesses rather than solely focusing on compliance checks.

Employers can be shown the benefit of empowering employees, as this increases employee satisfaction and leads to a healthier work culture.

The main payroll focus of accountants should be on boosting compliance.

Many businesses fall into noncompliance through ignorance, so accountants can use their unique skills and expertise to highlight pitfalls and work to rectify issues.

The CIPP are due to release their next survey report soon, and it will be fascinating to chart the trends further.

To stay compliant with the latest payroll regulations, speak to our team today.