The ultimate guide to payroll legislation

Payroll legislation are the policies and procedures set out by the government to ensure that every employer in the UK runs their payroll consistently and legally. This payroll legislation guide contains all the information you need to stay compliant.

There have been a number of critical changes to payroll legislation in the UK within the past few years, so keeping up to date with what is expected of you will help your payroll team remain compliant and save you from a stern talk with HMRC.

The law is pretty simple here. If you employ people from the Pay As You Earn (PAYE) system, you need to adhere to payroll legislation.

If you don’t, you could be liable for fines or even having your PAYE scheme closed.

Off-payroll legislation is a set of payroll policies and procedures that ensures contract workers pay roughly the same tax and National Insurance as a traditional employee. You will need to consider these rules closely if you use agency workers or are an agency yourself.

You may also hear these rules referred to as ‘IR35’.

In the UK, payroll is regulated by HMRC - that means all your payroll needs to go through them. They’ll also be the ones responsible for auditing you.

The key reason why it is important to remain compliant with payroll legislation is to protect your payroll team and your business from any penalties that they may incur. These can be costly fines, but it can also be bad press or reduced employee goodwill.

Regardless of the shape of your business, the below are the key factors that your payroll will need to consider to ensure you’re meeting HMRC’s compliance requirements.

There have been a number of changes to payroll legislation in the UK of late. A combination of factors from the aftermath of the COVID pandemic to the cost-of-living crisis have caused shifts in policy. Here are some of the most important changes for you to consider.

It can often feel like payroll legislation is constantly shifting around. How are you supposed to keep up and stay compliant? Luckily there are a number of good habits you can get into place now, and this will pay off in the long run.

If you want to change how you handle payroll while remaining completely compliant with HMRC requirements, MHR’s payroll solutions are ideal.

Our solutions are cloud-based, which means we can roll out key updates to keep you HMRC compliant as quickly as possible, without having to organise an on-site visit. Likewise, our use of real-time payroll ensures you can spot and correct issues quickly without having to trawl through mounds of data, saving your payroll team an incredible amount of time.