What is PAYE?
Pay As You Earn (PAYE) is HMRC's system for collecting Income Tax and National Insurance contributions from employees' wages before they are paid. As an employer you are responsible for calculating, deducting and paying these amounts to HMRC on behalf of your staff.
Any business with at least one employee must register as an employer with HMRC and operate PAYE.
National Insurance contributions
National Insurance is paid by both employees and employers:
- **Employee NICs** — deducted from gross pay before the employee receives their net salary
- **Employer NICs** — an additional cost to the business, paid on top of the employee's gross salary
- **Class 1A NICs** — paid annually on benefits in kind such as company cars and private medical insurance
Rates and thresholds are updated each April. Finovo applies the current rates automatically when you run a payroll.
Real Time Information (RTI)
Real Time Information is HMRC's payroll reporting system. You must submit a Full Payment Submission (FPS) to HMRC every time you pay an employee — on or before payment date. Each FPS includes:
- 1Employee pay details and tax codes
- 2Year-to-date earnings and deductions
- 3National Insurance contributions for each employee
If you have a period with no payments, you send an Employer Payment Summary (EPS) instead.
Key payroll deadlines
| Deadline | What to do |
|---|---|
| On or before pay day | Submit Full Payment Submission (FPS) to HMRC |
| 19th of following month | Pay PAYE and NICs by cheque |
| 22nd of following month | Pay PAYE and NICs electronically |
| 6 July | Submit P11D forms for benefits in kind |
| 31 May | Issue P60s to all employees |
Missing an FPS triggers a late-filing penalty. Finovo submits the FPS automatically on pay day.
Auto-enrolment pension duties
If you employ at least one person, you must automatically enrol eligible employees into a workplace pension. Eligible workers are aged 22 to State Pension age and earn above £10,000 per year.
Minimum employer contribution is currently 3% of qualifying earnings; employees contribute at least 5% including tax relief. Finovo calculates and records pension contributions alongside payroll each month.
How Finovo handles UK payroll
Each pay run in Finovo:
- 1Calculates gross-to-net pay, tax codes and NICs
- 2Generates and stores payslips digitally
- 3Submits the Full Payment Submission to HMRC automatically
- 4Posts the payroll journal to your ledger
For businesses with employees in France or Germany, Finovo applies the correct local rules in the same pay run — no second payroll system required.