INVESTMENTS & PENSIONS

Payroll management is a critical aspect of running any business , and financial advisors are no exception . From tracking employee hours and calculating taxes to paying salaries and ensuring compliance with employment laws , the process can be complex and time-consuming .

HMRC have big plans to extend the reach of PAYE over the next couple of years , which will only add to any business owner ’ s compliance burden , including :

• Recording of employee hours worked and filing this data with the RTI submission made each month . Proposed to commence from April 2025 .

• Payrolling of benefits – in essence ditching the P11D form and including the benefits it covered in the main payroll submission to HMRC via RTI . This will involve doing a calculation to estimate 1 / 12th of the value of the benefit and applying it to that months ’ salary calculation . proposed to commence from April 2026 .

To effectively handle payroll for their employees , financial advisors need to be well-versed in several key areas .

1 . Understanding UK Payroll Taxes

Financial advisors must have a thorough understanding of the various payroll taxes applicable to their employees in the UK . This includes National Insurance contributions ( NICs ), Pay as You Earn ( PAYE ) income tax , and student loan repayments . It ' s crucial to stay updated on any changes in tax rates and regulations to ensure accurate withholding and reporting . The above two changes are a case in point .

2 . Correctly Classifying Employees

Accurately classifying employees as either workers or contractors is essential for financial advisors in the UK . This classification determines how payroll taxes are calculated , as well as the rights and obligations of both parties . Misclassification can lead to legal and financial repercussions , so it ' s important to understand the criteria for each classification .

3 . Complying with UK Wage and Hour Laws

Financial advisors must adhere to UK wage and hour laws , which include minimum wage requirements , overtime pay , and holiday pay entitlements . Familiarity with these laws ensures that employees are compensated fairly and in accordance with regulations , minimizing the risk of labour disputes or legal issues . The recording of employee working hours from April 2025 will add a further level of complication .

4 . Selecting a Reliable Payroll Processing System

With various options available , financial advisors need to choose a reliable payroll processing system that suits their business needs . This may involve using payroll software , outsourcing payroll to a third-party provider , or handling it internally . Financial advisors should understand how to accurately calculate employee wages , deductions , and withholdings , as well as manage payroll schedules and deadlines . Cost is also a consideration in this instance .

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