What Is Payroll & CIS?
Payroll and CIS are essential financial processes that ensure employees and contractors are paid accurately and on time while staying compliant with HMRC regulations.
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Payroll
Payroll refers to the process of managing employee salaries, taxes, and other deductions. It involves calculating wages, withholding tax (PAYE), and ensuring compliance with UK employment laws.
Key Components of Payroll
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Employee Wages
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Calculating salaries, overtime, bonuses, and statutory payments like sick pay or maternity pay.
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Tax Deductions
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Deducting Income Tax and National Insurance Contributions (NICs) and submitting these to HMRC.
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Pension Contributions
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Managing auto-enrolment and contributions to workplace pension schemes.
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Payslips
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Providing employees with payslips detailing their earnings and deductions.
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Compliance
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Ensuring all payroll processes align with HMRC regulations, including submission of Real Time Information (RTI).
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Year-End Tasks
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Preparing and filing P60s, P11Ds, and other necessary documents.
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CIS (Construction Industry Scheme)
The Construction Industry Scheme (CIS) applies to contractors and subcontractors in the construction industry. It’s a way for HMRC to ensure that taxes are deducted at source from payments to subcontractors.
Key Components of CIS
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CIS Registration
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Contractors and subcontractors must register with HMRC for CIS.
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Tax Deductions
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Contractors deduct tax (20% for registered subcontractors, 30% for unregistered ones) from payments and pass it to HMRC.
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CIS Returns
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Contractors must submit monthly CIS returns to HMRC, detailing payments made and deductions applied.
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Verification
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Contractors must verify subcontractors with HMRC to ensure correct tax deductions are applied.
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CIS Statements
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Contractors issue payment and deduction statements to subcontractors for their records.
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Compliance
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Both contractors and subcontractors must ensure their records and submissions comply with HMRC regulations.
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