Payroll is one of those things that looks simple until you’re actually doing it. Pay your staff the right amount, deduct the right tax, submit the figures to HMRC — how hard can it be?
Quite hard, as it turns out. PAYE calculations, Real Time Information submissions, National Insurance contributions, auto enrolment, holiday pay, statutory payments — there’s a lot to get right every single month. And the consequences of getting it wrong range from employee frustration to HMRC penalties.
This is why more UK employers are turning to online accountants for payroll support. This article explains what remote payroll management actually involves, what PAYE and RTI compliance requires in practice, and how the right accountant keeps everything running smoothly behind the scenes.
What Is PAYE and Why Does It Matter?
PAYE — Pay As You Earn — is HMRC’s system for collecting Income Tax and National Insurance Contributions from employees. As an employer, you’re responsible for calculating these deductions correctly and paying them across to HMRC on time, every pay period.
It’s worth being clear about something: PAYE isn’t optional, and the responsibility sits with you as the employer, not with your employees. If you underpay, overpay, or submit incorrectly, it’s your problem to fix — and there can be penalties involved.
For small business owners, PAYE sits alongside everything else you’re trying to manage. It’s not just the calculation — it’s keeping up with changing tax codes, handling new starters and leavers, dealing with statutory sick pay, and making sure the figures tie in with your wider financial reports and analysis.
What Is RTI and What Does It Require?
Real Time Information (RTI) was introduced by HMRC in 2013 and fundamentally changed how payroll reporting works. Before RTI, employers reported their payroll figures annually. Under RTI, you report every time you run payroll — before or on the day you pay your employees.
The main submission is called a Full Payment Submission (FPS). Every FPS must include:
- Each employee’s name, National Insurance number, and tax code
- Their gross pay for the period
- The Income Tax and National Insurance deducted
- Any statutory payments made (sick pay, maternity pay, etc.)
- Year-to-date figures for each employee
You also need to submit an Employer Payment Summary (EPS) in months where you haven’t paid any employees, or to claim reductions such as Employment Allowance.
Missing an RTI submission, submitting late, or submitting inaccurate figures can all trigger HMRC late filing notices and financial penalties. For businesses with fewer than 10 employees, the penalty for late submissions is currently £100 per month. It rises quickly for larger payrolls.
Auto Enrolment: The Bit That Often Gets Forgotten
On top of PAYE and RTI, most employers have ongoing workplace pension obligations under auto enrolment. If you employ staff who are aged between 22 and State Pension age and earn above £10,000 per year, you must automatically enrol them into a qualifying pension scheme and make employer contributions.
The minimum employer contribution is currently 3% of qualifying earnings. Employees contribute at least 5%, making a combined minimum of 8%.
You also need to:
- Write to all eligible employees explaining the scheme
- Re-enrol any employees who opted out every three years
- Keep records of your compliance for HMRC and The Pensions Regulator
This is an area where mistakes are surprisingly common, particularly for businesses that take on their first employee without realising the obligations kick in almost immediately. Our auto enrolment pensions accountants Slough service handles the setup and ongoing management so you’re not navigating The Pensions Regulator’s rules alone.
National Minimum Wage — Getting It Right
One of the most visible payroll compliance issues in the UK is paying employees below the National Minimum Wage or National Living Wage. HMRC actively pursues employers who underpay, and the consequences include having to repay the underpayment plus a penalty of up to 200% of the amount owed.
The rates change every April, so payroll needs to be updated at the start of each tax year. Our post on minimum and living wage rates from April 2025 covers the current rates across all age groups.
Common ways employers accidentally fall below the minimum wage include:
- Deducting uniform costs or equipment that brings pay below the threshold
- Not accounting for all hours worked, including travel time between jobs
- Using the wrong age band for younger workers
- Miscalculating pay for workers on irregular hours
A monthly payroll review by an accountant catches these issues before they become a problem.
Holiday Pay — More Complicated Than It Looks
Holiday pay is another area where employers regularly make costly errors. Most workers are entitled to at least 5.6 weeks of paid holiday per year under the Working Time Regulations, but calculating what they should be paid during that leave is not always straightforward.
For workers on fixed hours and regular pay, it’s simple enough. But for staff on variable hours, irregular shifts, or those who regularly receive commission or overtime, the calculation becomes more involved. HMRC and Employment Tribunals expect holiday pay to reflect normal pay — not just basic salary if the employee regularly earns more.
Our article on understanding the calculation of holiday pay goes through the rules in detail. Getting this wrong doesn’t just cost money — it can lead to employment tribunal claims.
What Remote Payroll Support Actually Looks Like
When you work with an online accountant for payroll, the day-to-day process is more straightforward than many business owners expect.
You provide the data. At the end of each pay period, you let your accountant know about any changes — new starters, leavers, hours worked, overtime, bonuses, or statutory payments. This can be done by email, through a shared document, or via your accounting software if it has a payroll module.
Your accountant runs the payroll. They calculate gross pay, apply the correct tax codes and National Insurance rates, work out deductions, and produce payslips.
RTI submissions are made on time. Your accountant submits the FPS to HMRC before or on payday — every pay period, without exception.
Pension contributions are calculated and reported. The correct amounts are calculated for each eligible employee and submitted to your pension provider.
You get a clear summary. You receive a breakdown of what to pay each employee and what’s due to HMRC, so there are no surprises.
For many small businesses, this happens monthly and takes very little of your time once the initial setup is done. If you’re also using cloud accounting, the figures feed directly into your bookkeeping — which makes your accountants for company accounts work significantly easier at year end.
Our post on what an accountant does for an SME gives a broader picture of how payroll fits into the overall accounting support a business typically needs.
Payroll for Directors
If you’re a company director, your payroll situation has a few extra layers. Most directors take a low salary — typically set around the National Insurance secondary threshold to minimise employer NI — combined with dividends.
Getting this structure right has tax implications that go beyond the payroll itself. The salary level affects your National Insurance record, your pension entitlement, and how your corporation tax is calculated. It also needs to be consistent with what’s reported in your Self Assessment return.
Our guide on director pay: salary vs dividends in 2026 explains how to think about this structure and what’s changed recently. And for the Self Assessment side of things, working with accountants for tax returns who also handle your payroll means everything ties together without the risk of inconsistencies between the two.
How National Insurance Works for Employers
As an employer, you don’t just deduct employee National Insurance — you also pay employer’s National Insurance Contributions on top. For the 2025/26 tax year, the employer NI rate is 15% on earnings above the secondary threshold.
This is a real cost that needs to be factored into your employment decisions. When you’re taking on a new member of staff, the total employment cost is their salary plus employer NI plus pension contributions — which is typically around 15–20% more than the headline salary figure.
Our article on National Insurance Contributions breaks down the different classes and rates clearly, which is useful reading if you’re planning to grow your team.
Employment Allowance can offset up to £10,500 per year of employer NI (from April 2025), but not all employers qualify — single-director companies with no other employees are excluded, for example.
Why Get Payroll Wrong When You Don’t Have To?
Some of the most common payroll errors we see when new clients come to us include:
- Using the wrong tax code for an employee — often because a P45 wasn’t received from a previous employer
- Forgetting to update tax codes when HMRC issues new ones mid-year
- Missing the RTI deadline because the business owner was busy or away
- Not processing a leaver correctly, leaving them on the payroll after they’ve left
- Failing to submit an EPS in months with no payments, leaving HMRC expecting an FPS that never came
- Getting statutory sick pay or maternity pay calculations wrong
Each of these is fixable, but they create unnecessary admin, potential penalties, and — most importantly — stress for you and confusion for your employees.
Good bookkeeping services combined with managed payroll means your records are consistent across the board. Payroll costs feed directly into your accounts, your VAT position is updated, and your management reports reflect the actual cost of running your business.
Payroll and the Bigger Picture
Payroll doesn’t sit in isolation. It connects to your tax position, your company accounts, your cash flow forecasting, and your obligations to HMRC across multiple fronts.
When your accountancy services cover payroll alongside bookkeeping, VAT, and annual accounts, the information flows between each area without needing to be re-entered or reconciled manually. This is the real advantage of having one firm look after everything — not just convenience, but accuracy.
For businesses in and around Berkshire, our accountants in Reading office handles payroll for clients ranging from sole directors to businesses with larger teams. If you’re based further out, we work with clients remotely across the UK with no reduction in service.
As sole trader accountancy services clients who take on their first member of staff quickly find, getting proper payroll support in place from day one is far easier than trying to retrofit it later. And as our small business accountants clients will confirm, having it all managed in one place makes a real difference at year end.
FAQs
Do I need payroll software if I only have one employee? Under RTI, you must submit payroll information to HMRC digitally every pay period. This means you do need HMRC-compatible software — you can’t submit manually. If you only have one or two employees, a simple cloud payroll tool is usually sufficient, but having an accountant manage it on your behalf is often more cost-effective than you’d expect.
What is an FPS and when do I need to submit it? A Full Payment Submission is the RTI report you send to HMRC every time you pay your employees. It must be submitted on or before payday — not after. Late submissions can result in HMRC penalty notices.
What happens if I make a payroll mistake? Most payroll errors can be corrected in the following pay period or through an amended submission to HMRC. The key is catching mistakes quickly — the longer they go uncorrected, the more complicated they become to fix. If you’ve made a significant error, your accountant can liaise with HMRC directly.
Do I have to run payroll every month? No — payroll frequency depends on how often you pay your staff. Weekly, fortnightly, and four-weekly payrolls are all valid. You submit an RTI return each time you run a pay run, regardless of the frequency.
What’s the Employment Allowance and do I qualify? Employment Allowance allows eligible employers to reduce their employer NI bill by up to £10,500 per year (from April 2025). Most small businesses qualify, but single-director companies with no other employees on the payroll do not. Your accountant should check your eligibility and apply for it if you qualify — it’s not applied automatically.
Can I manage payroll myself using QuickBooks? Yes — QuickBooks has a built-in payroll module that handles RTI submissions, tax calculations, and payslips. However, even businesses using QuickBooks often prefer to have their accountant manage payroll to ensure accuracy and compliance. As QuickBooks accountants, we manage payroll within the platform for many of our clients.
Let Us Take Payroll Off Your Plate
Running payroll correctly every month takes time, attention to detail, and a working knowledge of rules that change regularly. Most business owners have better things to do with that time.
At Asmat & Co, we manage payroll for businesses of all sizes — from single-director limited companies through to businesses with growing teams. We handle RTI submissions, auto enrolment, payslips, PAYE reconciliation, and everything in between, with a guaranteed response to any query within three hours.
With offices in Slough, Reading, and Wednesbury, and the ability to work with clients remotely across the UK, we’re well placed to take this off your hands completely.
Get in touch today for a free, no-obligation consultation →
No hidden fees. No jargon. Just reliable payroll support, every month.
