Top 12 Must-Know UK Payroll Questions Answered

Payroll person calculating employees salaries ready to process payroll

In payroll, there’s a lot to keep track of, from navigating regulations to avoiding common mistakes. To help you manage this critical function, we’ve rounded up the 12 top UK payroll questions that come up most frequently. This guide will provide insights and practical advice on how to resolve these issues effectively.

Whether you’re a seasoned payroll professional or just getting started, we’ve got you covered with actionable tips. And since National Payroll Week is in early September, there’s no better time to dive into these essential topics! Let’s ensure your payroll runs as smoothly as a blockbuster hit—without the drama. Even if you’re the Payroll Superman of your team, it’s normal to encounter a few kryptonite moments.

From avoiding payroll blunders to navigating complex regulations, there’s plenty to manage, so let’s get started with the top 12 UK payroll questions we hear about a lot:

Please note that this blog is designed as a guide, and your circumstances may differ from these generalised answers. The answers may also have changed since the time of publishing. If unsure, consult us directly or a trusted payroll expert.

Help! I’ve Overpaid an Employee—What Should I Do?

When payroll mistakes happen, like overpaying an employee, what’s the next step?

If you’ve overpaid an employee, don’t panic.

Notify the employee about the overpayment and explain how you’ll recover the excess amount.
Consider the employee’s circumstances. With the rising financial stress caused by the cost-of-living crisis, this unexpected expense may hit the employee hard, especially if the amount is significant.
Arrange repayment options. Depending on the situation, you can either deduct the overpaid amount from future wages or set up a repayment plan.

Make sure to follow legal guidelines and document everything to avoid disputes. It’s better to put things in writing and get responses in writing too, so everyone is on the same page. If in doubt, consult your HR team or outsourced HR provider.

Pro-Tip: Prevention is better than a cure. Analyse your payroll process to avoid repeats that demotivate your staff, break the trust barrier, and cause compliance complications. Regular payroll audits can be a lifesaver!

Explore more tips from HMRC on paying employees the wrong amount.

Oops! I Paid an Ex-Employee—What Now?

Accidentally sent a payslip to someone who’s already left? Here’s how to fix it.

Imagine the scenario: Someone leaves the business, but with all the HR and payroll admin flying around, the message gets missed, and you accidentally pay an ex-employee. This is an awkward but hopefully fixable situation that you can resolve amicably.

Contact the former employee immediately, explaining the mistake and requesting the money back.
Be clear about the amount and how they can return it.
Review your payroll processes to prevent this from happening again. If it happens once, that’s a warning signal. If it happens twice or more, you have a fire to put out.

How Can I Opt an Employee Out of the Pension Scheme?

Looking to remove an employee from your pension scheme after they request it? Here’s the process.

The employee must voluntarily opt out by completing an official opt-out form from your pension provider.
As an employer, you can’t encourage or force them to opt out, as that could land you in legal hot water.
Adjust your payroll to stop pension contributions once the form is submitted, and ensure the employee receives any refunds due for contributions already made.

Pro-Tip: Signpost your employees to pension advice and resources. While you can’t force your employee to stay in a pension scheme, you can steer them towards the right decision for their long-term financial health. It’s worth checking in with the employee periodically to ensure they still want to be opted out.

Can Employers Offer Paid Time Off Instead of Overtime Pay?

Is swapping overtime pay for extra time off an option? Let’s break it down.

Yes, employers can offer paid time off (TOIL – Time Off in Lieu) instead of overtime pay, but it’s imperative that both parties agree to this. Make sure you don’t inadvertently pay them below minimum wage rates or contravene working time regulations.

Document this with a written agreement and clearly mark it in employment contracts.
Ensure the TOIL matches the overtime worked, and employees use their time off within a reasonable period to avoid backdating or taking too much time off at once.

Just remember—this isn’t a one-size-fits-all solution. Engaging with your teams is important here.

Explore more on the GOV.UK’s guidance on maximum weekly working hours.

What’s the Best Way to Calculate Holiday Pay?

Need to calculate holiday pay? Here’s a quick and easy guide.

Calculating holiday pay correctly ensures employees are paid fairly during their time off.

For employees with regular hours, pay their usual earnings (full pay) during their holiday period.
For employees with variable hours or earnings, calculate the average weekly pay over the previous 52 weeks.

Holiday pay calculations can get tricky, so double-check your maths to avoid costly errors—your employees will appreciate it!

Check out ACAS’s detailed guide on calculating holiday pay.

Do I Still Have HMRC Duties with a Payroll Bureau?

Using a payroll bureau? Here’s what you still need to handle with HMRC.

Even if you use a payroll bureau to support you, you’re still responsible for ensuring accurate and timely submissions to HMRC, including Real Time Information (RTI) and payments. Your payroll bureau may handle the day-to-day processing, but as a UK employer, you must provide accurate data and verify that everything is submitted correctly.

Think of it as outsourcing the cooking but still needing to check that the kitchen hasn’t caught fire!

You can do this by ensuring excellent communication channels with your UK payroll bureau and ensuring they send you confirmations, especially for important deadlines such as Year-End and P11Ds. Payroll providers should give you adequate warnings about important upcoming dates too.

Not sure if it’s time to switch payroll provider? Explore our guide on when to switch payroll providers.

How Do I Set Up Payroll as a New Business?

Starting a new business? Here’s a step-by-step guide to setting up payroll.

Setting up payroll as a new small business or start-up involves several key steps.

First, register with HMRC as an employer and get your (Pay As You Earn) PAYE reference number.
Next, choose your payroll software or a payroll service provider to manage calculations, deductions, and submissions.
Collect key information from your first employees, like their National Insurance numbers and tax codes.
Finally, familiarise yourself with your legal payroll obligations, such as submitting RTI reports to HMRC.

Starting a new business is like opening a new restaurant—you’ll need the right ingredients (or software) to serve up perfect payroll!

Want to know what other payroll challenges might come your way as a small business? Explore our blog on payroll challenges for small businesses.

For a step-by-step guide, visit the GOV.UK’s payroll setup page.

What Exactly is a Tronc Scheme?

Wondering what a Tronc Scheme is and how it affects payroll? Find out here.

A Tronc Scheme is a special payroll arrangement most common in the hospitality sector, used to distribute tips and service charges among employees.

You need a troncmaster to manage this process effectively. The troncmaster is tasked with ensuring that tips are distributed fairly and, importantly, that the right amount of tax is paid on these tips. This process must be set up correctly to remain compliant with HMRC guidelines.

Think of it as the legal, organised way to make sure everyone gets their fair slice of the tip pie!

Should You Run Payroll Weekly or Monthly?

Debating between weekly and monthly payroll? Here’s what to consider.

Deciding between weekly and monthly payroll depends on your business, sector, and workforce. Weekly payroll can boost employee satisfaction, especially for hourly workers who appreciate frequent payments.

Weekly payroll is prevalent in industries like manufacturing, construction, and hospitality. On the downside, you end up doing the payroll process 4-5 times a month instead of once. This makes it more time-consuming and costly to manage, so consider your options carefully.

Monthly payroll is typically more efficient and cost-effective but might not suit employees who prefer regular cash flow. It may be jarring for staff used to weekly pay, especially if they are moving from another job in the sector on weekly pay.

Consider your employees’ preferences and the administrative burden before deciding what is best for your business and your employees. It’s like choosing between a blockbuster movie or a binge-worthy TV series—both have their pros and cons!

For more on payroll frequency, check out CIPP’s advice.

Help! Our Payroll Person is Going on Holiday—What Are My Options?

Payroll staff on holiday soon? Discover how to get cover and avoid a payroll panic.

This is definitely one of those situations you can see coming. If you’re reliant on one person for payroll, there will come a time when they need a well-deserved break or unexpectedly need time off.

The best thing to do is plan in advance. There are two ways you can handle this, and the more notice you have, the better—although hindsight is always 20/20, and we all get caught out sometimes.

Option 1: Train someone internally. It’s always best to have at least two members of staff who can cover day-to-day payroll so that someone can step in during an emergency.
Option 2: Outsource to a payroll provider for cover. Onboarding your payroll often takes a little time, even with a payroll switch guarantee as swift as Talk Staff’s. While this option is sometimes possible, it’s best not to act last minute.

Ensure the cover person has access to all necessary information and understands the payroll process to avoid any hiccups. You don’t want to disturb your payroll person while they are sunbathing abroad—otherwise, they may be tempted never to come back!

For options on payroll cover, see our payroll services at Talk Staff.

Can Employers Make Employees Pay for Their Uniforms?

Is it legal to require employees to pay for their uniforms? Here’s the lowdown.

Employers can require employees to pay for uniforms, but there are restrictions in place.

The cost can’t reduce the employee’s pay below the National Minimum Wage, and you must have a clear HR policy about uniform charges in your employment contract.
If the uniform is branded and only usable for work, you might want to consider footing the bill—nobody wants to be stuck in a uniform they paid for that screams “work mode” even on their day off!

Uniform policies should also include information on when not to wear a uniform. Otherwise, you might see your uniform on TV for all the wrong reasons!

For more on uniform policies, check out ACAS’s advice.

Do I Owe Notice Pay if I Withdraw a Job Offer Before Employment Starts?

If you retract a job offer, do you still need to pay notice? Here’s what you should know.

If you withdraw a job offer before the employee starts, whether you owe notice pay depends on the terms of the offer letter or contract.

If they’ve already accepted the offer, you may be liable for notice pay or compensation, especially if they’ve resigned from another job already.
Review the offer terms and seek legal advice to navigate this tricky situation. Retracting a job offer can have severe impacts on the individual and their family and could damage your company’s reputation.

Having a solid interview process to avoid last-minute issues will save you lots of time and prevent financial stress for the job candidate.

So…Which Payroll Questions Did We Miss?

Did we miss the payroll answer you were looking for? If that question isn’t here, drop us a message, and we’ll do our best to help point you to some excellent resources.

Bonus Trivia: Did you know the 1983 movie Trading Places involves a payroll switch-up? Imagine how different it would be with today’s payroll tech! Celebrate National Payroll Week by keeping your payroll in top shape—no Hollywood-style mishaps needed.

Remember, payroll is a vital part of your business. During National Payroll Week, take a moment to appreciate the complexity of the job and maybe indulge in some classic payroll karaoke!

Follow us at Talk Staff for more National Payroll Week tips and to see what we’re getting up to this year.