During National Payroll Week, we are highlighting the importance of accurately running payroll. Here we outline the business benefits of outsourcing this key administrative function.
It is a lesser-known fact that payroll is the largest expenditure for the majority of UK businesses, and is therefore considered a serious compliance with HMRC, due to its impact on the UK economy.
In 2018/19 alone, £250 billion was collected through PAYE and National Insurance contributions. The office for budget responsibility has estimated that more than £301 billion will be collected through payroll taxes by the end of the 2019/20 tax year.
As payroll is one of the most important tasks in running a business, outsourcing can provide a number of benefits to your organisation.
1. Outsourcing payroll reduces risks and avoids penalties
Having an outsourced team devoted to your payroll process rescues the risk of mistakes being made. If you file late or incorrect tax returns, you will incur a fine. HM Revenue & Customs fines thousands of businesses each year for incorrect tax returns, with the numbers growing year on year. Outsourcing to a payroll professional will ensure that tax returns are filed accurately and on time, reducing the risk of penalties.
Confidentiality is one of the biggest reasons an employer should outsource their payroll. The high level of sensitivity in payroll data is an important issue not to be overlooked. A payroll provider will ensure security and confidentiality of all data, complying with GDPR regulations.
2. It gives you access to knowledge and expertise
A payroll services company will have the knowledge and expertise to ensure that your business is constantly up to date with the latest legislation.
There are over 174 pieces of regulations affecting payroll in the UK, and with the uncertainty of Brexit’s impact, it’s clear that payroll requires a breadth of knowledge. The constant updating of legislation is just as relevant to small businesses as it is to large ones, and the repercussions of failing to comply with payroll requirements could have a large impact on your business.
Statutory payments, for example, tend to be a grey area. Are you aware that on a case-by-case basis, employers can apply for advanced statutory funding to help with Statutory Maternity Payments? Statutory payments can involve complex calculations when instances such as insolvency or redundancy occur, which is another key reason to seek professional assistance when processing payroll.
3. It frees up time and resources
The payroll process can be time consuming. It requires a great deal of attention to detail, which naturally increases as staff numbers grow. Processing payroll takes away hours that could be used to in other means to benefit the company. Outsourcing payroll frees up employees’ time, allowing them to concentrate solely on the business.
4. It helps you meet Automatic Enrolment responsibilities
Since the introduction of the Automatic Enrolment in 2012, The Pensions Regulator (TPR) has confirmed that 1.4 million employers have met their automatic enrolment duties. This has resulted in 10 million workers being able to put more towards their retirement through automatic enrolment.
However, there is still a long way to go with automatic enrolment and for many employers, the process can seem daunting. Among other pension duties, this entails re-assessing employee’s pension statuses and completing the re-declarations. Again, failure to comply with these duties could result in TPR taking enforcement action.
Outsourcing to a payroll professional means responsibilities, such as automatic enrolment, are taken care of and processed accurately. Ensuring duties are met will also result in a happier and satisfied workforce.
5. It can reduce costs
Most big businesses can afford to have payroll departments within the organisation, but for small or medium sized businesses, even a small team can be expensive.
If you compare the cost of the hours employees spend on the payroll process to the cost of using a professional payroll provider, you could be surprised at the difference. Not only would outsourcing be cost effective, it also provides the additional benefits listed above, meaning you are also getting better value for money.
How Thomas Westcott can help you achieve HMRC payroll compliance
It is evident that there are huge benefits to payroll being managed by experienced professionals in order to help you achieve the maximum out of your payroll processing and options.
Outsourcing your payroll to Thomas Westcott means you will be receiving the benefits of a large amount of experience from our qualified team. You will also have access to knowledge from our highly sought after Tax team, ready to support on any bespoke employee tax issues.