How Much Does Outsourcing Payroll Cost?

At Alderley Payroll Services we believe in transparency when it comes to pricing our payroll services. As well as our downloadable pricing guide, we also have a sample pricing guide and the option of contacting us for help with quotes.

All payroll services also include workplace pension administration.

Pricing Guide

We have an easy-to-use downloadable pricing guide. Once downloaded all you need to do is enter the number of employees in the yellow box and you will get an instant price per pay period, along with the price per payslip.

Sample Pricing Guide

Payslips/pay periodpayslip priceTotal cost incl. pension admin/pay period
1£3.90£3.90*
10£3.90£39.00
20£3.61£72.20
30£3.38£101.50
40£3.17£126.90
50£3.05£152.30
60£2.87£172.20
70£2.74£192.10
80£2.65£212.00
90£2.58£231.90
100£2.52£251.80
150£2.01£300.80
200£1.75£349.80
250£1.52£379.30

* A fee of £30.00 + VAT applies if the total number of payslips processed in the whole tax year is fewer than 25.

Contact Us

Don’t hesitate to get in touch if you would like us to help with pricing or any other payroll and workplace pension questions you may have.

For a more detailed guide on our services please head over to our Payroll Services page.

How To Assess Workers for Auto Enrolment

How To Assess Workers for Auto Enrolment

Yep, it’s another blog post on auto enrolment and workplace pensions as it’s a tricky subject! This time we will look at the assessment process, which includes identifying workers, the difference between a jobholder and an entitled worker, then finally the different pensionable statuses and what action is required of each.

Each pay period all workers must be assessed as part the employer’s workplace pension duties. The category or status the worker falls under will determine what action, if any needs to be taken. Before we start with the assessment process though we first need to identify the ‘workers’.

What is a ‘worker’?

HMRC say a person is generally classed as a ‘worker’ if:

  • They have a contract.
  • Their reward is for money or a benefit in kind.
  • They only have a limited right to send someone else to work (subcontract).
  • They have to turn up for work even if they don’t want to.
  • Their employer has to have work for them to do as long as the contract or arrangement lasts.
  • They aren’t doing the work as part of their own limited company in arrangement where the ‘employer’ I actually a customer or client.

Once the employer has identified if they have a worker(s), they then need to understand if the worker is a jobholder or an entitled worker.

What is a jobholder?

A jobholder is aged between 16 and 74, usually works in the UK under contract and has qualifying earnings payable by the employer in the pay period being assessed. Jobholders can fall under one of two categories,

Eligible employees:

  • Aged between 22 and SPA.
  • Earn over £10,000/pa.
  • Employee must be automatically enrolled.
  • The employer must provide a qualifying workplace pension scheme.
  • The employer must also contribute at least the current minimum contribution.

Non-eligible employees:

  • Aged between 16 and 21 or between State Pension age (SPA) and 74, earns over £10,000 per annum, OR aged between 16 and 74, earns between £6,240 – £10,000 per annum.
  • Employee not automatically enrolled.
  • Employee can request to join a pension scheme.
  • If employee requests to join a scheme the employer must provide a qualifying workplace pension scheme.
  • The employer must also contribute at least the current minimum contribution.

What is an entitled worker?

Entitled workers are aged between 16 and 74, are usually working in the UK under contract and do not have qualifying earnings.

Entitled employees:

  • Aged between 16 and 74.
  • Earn less than £6,240 per annum.
  • Employee not automatically enrolled.
  • Employee can request to join a pension scheme.
  • If the employee wants to join a scheme the employer must provide a pension scheme though this doesn’t need to be a qualifying workplace pension scheme.
  • Employer doesn’t need to contribute to pension scheme if employee requests to join a scheme.

Assessment

With the information above you are now ready to assess your workers. You need to ensure you include the correct pay when making the assessment.

Pay types that must be included in assessment:

  • Salary
  • Bonus
  • Commission
  • Overtime
  • SSP
  • SMP
  • Paternity pay
  • Statutory adoption pay

Further Information

If a worker becomes eligible and then enrolled, even if they earn below the threshold to be eligible in any future pay periods, they continue to be eligible and enrolled within the scheme. If a jobholder or entitled worker is non-eligible or entitled, depending on their age and earnings, their pensionable status can change between pay periods.

If you have any questions about this article, or the payroll and workplace pension services we provide please get in touch.

Changes to the Coronavirus Job Retention Scheme for August & September

From 1st August 21 there are further changes being introduced to the Coronavirus Job Retention Scheme.

From August the employer can claim back 60% of the employees’ wages, down from 70% in July. The employer must top up the remaining 20% to ensure employees continue to receive 80% of their wages. Employers can still top up to 100% if they so wish.

 AugustSeptember
Claimable amount60% up to £1,87560% up to £1,875
Employer NI and pension contributionsYesYes
Mandatory employer top up20% up to £62520% up to £625
Employee receives80% up to £2,500/mth80% up to £2,500/mth

The Coronavirus Job Retention Scheme finishes on the 30th September 2021.

Benefits of Outsourcing Payroll

Payroll has always been an evolving area, but none more so than in the last 9 years. Many changes have come in, whether this be the introduction of Real Time Information (RTI), auto enrolment, NI Employment Allowance, or more recently the Coronavirus Job Retention Scheme (CJRS). Along with these bigger changes there are the regular adjustments to tax bands, tax codes, NI Employment Allowance entitlement rules and the list goes on. All these changes have moved payroll into a specialist area, requiring genuine expertise.

Companies choose to either employ a payroll specialist(s) to work in house or use an outsourced service, with benefits to both options. Outsourcing payroll avoids the cost and duties that come with extra employees, along with the commitment, as you can terminate services with Alderley Payroll Services at any time with no notice period. Outsourcing also avoids any potential issues that arise when your employee who processes the payroll takes annual leave, is off ill, or leaves/retires. We can ensure your payroll will always be processed on time every pay period without you having to worry.

Its not only employers which benefit from outsourcing payroll, accountants and bookkeepers also find many benefits. It is a time-consuming process keeping up to date with the current rules and regulations, and outsourcing payroll will save you this time. When working with accountants and bookkeepers, Alderley Payroll Services can either work with the accountant/bookkeeper or directly with the end client. We offer a tailored approach to payroll and workplace pension services to ensure excellent service and accurate work, whilst leaving the accountant/bookkeeper time to focus on other areas.

We are excited to announce that Alderley Payroll Services has started working with Modulr. This not only allows us to pay employees on behalf of our clients, but also pay PAYE taxes to HMRC which ensures you avoid late payment.

Our service includes:

  • Payroll processing accurately and on time.
  • RTI filing.
  • Filing CIS deducted & suffered.
  • Setting up workplace pension schemes with NEST, The Peoples Pension & Now
  • Filing declarations of compliance with The Pensions Regulator.
  • Workplace pension administration with NEST, The Peoples Pension, Now, Royal London, Creative Pension Trust, True Potential and many others.
  • Make payments to employees on your behalf.
  • Pay PAYE taxes to HMRC on your behalf.
  • Alderley Payroll Services can become your HMRC agent which allows us to speak to HMRC on your behalf and receive tax code and student loan notices directly.
  • Unlimited help and advice on all things payroll.
  • Cloud service which includes your own company dashboard and login.
  • Gross to net or net to gross calculations.
  • Year end P60 production.
  • BACS file preparation.

If you have any questions about outsourcing your payroll and workplace pension needs please get in touch.

New logo and website!

We felt it was time to update our logo and website and we couldn’t be happier with the new look! Do not worry though, the trusty robin is here to stay and takes centre stage in our new logo!

Fun fact, the robin first became our logo because the company owner originally comes from Bristol and Bristol City FC have a robin on their badge.

Please have a look around the new website and let us know what you think!

How is Income Tax Calculated?

Following on from our last blog where we attempted and hopefully succeeded in demystifying qualifying earnings, we thought it would be worth doing something similar with income tax.

To quote HMRC, “Income Tax is a tax you pay on your income”, which basically means income tax will be levied on a proportion of gross earnings each pay period.

Income tax will vary depending on the employee’s tax code and earnings. It is common for an employer to ask why one employee is receiving a lower net pay than another employee who earns the exact same gross pay. There are many reasons why the two employees can come out with different net pays, but one of those reasons is the tax code each employee has, and subsequently what their respective Personal Allowances are.

What is Personal Allowance? This is the amount of tax-free earnings an employee has in any given tax year. It is worth noting employers and employees NI free pay is based on different rates and is different to the Personal Allowance. The standard Personal Allowance for 21/22 is £12,570, which translates to the tax code 1257L. An employee on the tax code 1257L will not pay income on earnings below £12,570 for the tax year, however, the allowance is proportioned per pay period and income tax is calculated on a year-to-date basis.

As an example, if a monthly paid employee has the tax code 1257L, which provides tax free pay of £12,570/12 = £,1047.50 tax free pay each month. If the employee were to stay below £1,047.50 for the month 1 (April) payroll, they would pay no income tax. However, once they go over their Personal Allowance for the month, they will start paying income tax @ 20% on all earnings over £1,047.50 that month. Higher rates of income tax will be deducted depending on the employees’ earnings. Below is a table from HMRC showing the different income tax brackets,

BandTaxable incomeTax rate
Personal AllowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £150,00040%
Additional rateover £150,00045%

At this point it’s worth focusing on the previously mentioned point that income tax is calculated on a year-to-date basis. In the example above we discussed month 1 (April), but what happens when we start to progress through the tax year? Well, if we are in month 2 (May) and the employee has the code 1257L they will have two months tax free allowance,

12,570/12 x 2 = £2,095 tax free pay

As income tax is calculated year-to-date you need to use the earnings year to date. If the employee earnt £2,000 in both April and May, YTD they have earnt gross £4,000. As per the calculation above they have £2,095 tax free pay, which you then deduct from the YTD earnings,

4,000 – 2,095 = £1,905 taxable earnings

20% of 1,905 = £381 income tax YTD

 It is important to remember this is the YTD tax, not the tax deducted in month 2. The amount of tax payable in month 2 would be the tax YTD minus month 1 income tax.

A really useful report is the P11, this allows you to run through the tax year seeing how tax is being calculated as an employee progresses through the tax year.

I’ve spoken about income tax being calculated on a YTD basis numerous times in this blog, but there is an exception when income tax is calculated on the current pay period being paid. This happens when an employee has a week 1/month 1 tax code, otherwise known as emergency tax codes. These codes will either have W1, M1 or an X after the tax code, eg 1257L W1, 1257L M1 or 1257L X.

As an example, if an employee has a tax code 1257L M1 and was paid £2,000 in month 6 (September), the income tax calculation would be,

12,570/12 = £1,047.50 tax free paid

2,000 – 1,047.50 = £952.50 taxable earnings

20% of 952.50 = £190.50 income tax due

In the example above it doesn’t matter how much was earnt in the previous tax months in that tax year, the income tax is only calculated on the taxable earnings within that pay period.

I hope this blog serves as a useful guide to how income tax is calculated. It is a big subject and in fairness we haven’t been able to cover all areas. In future blogs we will look at different areas of income tax, but in the meantime HMRC has useful resources for further reading. If you have any questions, please drop us a message.

What Are Qualifying Earnings?!

At Alderley Payroll Services we believe it’s really important employees understand how their pay is calculated. One question frequently asked is, “what are qualifying earnings?” To answer that in one sentence quoting from the NEST website,

“Qualifying earnings is the name given to a band of earnings that you can use to calculate contributions for auto enrolment.”

Before we delve any further it should be noted different pension schemes have different methods to achieve the earnings used for pension calculation. What I am going to explain here is the most common method used, which is qualifying earnings.

Qualifying earnings are earnings that fall between £520/mth – £4,189/mth. So instead of using an employee’s entire earnings for that period, you need to first calculate the qualifying earnings used for the pension calculation. The table below shows the different levels of qualifying earnings depending on the pay period.

Pay reference period
2021/22Annual1 weekFortnight4 weeks 1 month1 quarter Bi-annual
Lower level of qualifying earnings£6,240£120£240£480 £520£1,560£3,120 
Earnings trigger for automatic enrolment£10,000£192 £384£768£833£2,499£4,998 
Upper level of qualifying earnings£50,270£967 £1,934£3,867£4,189 £12,568£25,135 

Example 1, if an employee earnt £2,000/mth gross, the calculation to achieve the qualifying earnings would be,

2,000 – 520 = £1,480

Now we have the qualifying earnings we can use this to calculate the pension contributions.

Example 2, if an employee earns below £520/mth the employee wouldn’t have any contributions even if the employee was enrolled into the workplace pension scheme. If the employee next pay period earns more than £520 they will have pension contributions for that period.

For one last example, the employee earns £5,000/mth. The calculation would be,

4,189 – 520 = £3,669

You will notice in the example above as the employee earns £5,000/mth this is over the upper earnings level and therefore £4,189 is used instead in the calculation of the qualifying earnings.

If you want to now carry on calculating the contributions…

Currently the minimum pension contribution required is 3% employer and 5% employee. Another thing to point out now is the employee contribution you see deducted through the payroll might be 4%. Whether 4% or 5% is deducted through the payroll is dependent on whether the pension is a relief at source or net pay arrangement. This is a topic in itself and warrants another blog post. For now I’m going to use the relief at source method as this is the most commonly used. Relief At Source means the worker contributes 80% of the total contribution, whilst the government contributes the remaining 20% directly to the pension scheme.

To calculate the employee contribution, we now need to calculate 4% of the qualifying earnings using example one above,

4% of 1,480 = £59.20

To calculate the employer contributions, we do the same as the above but based on 3% of the qualifying earnings, 3% of 1,480 = £44.40

To finish this example off the government contribution would be 1% of £1,480 = £14.80, this however wouldn’t show on the payroll.

For further information regarding auto enrolment and employer workplace pension duties please click workplace pension duties.

If you are an employer/business adviser and looking for detailed guidance head to The Pension Regulator website.

www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers

We have previously posted articles on re-enrolment duties which you can find here and if there are any other subjects, whether that be workplace pensions, or anything else to do with PAYE and payroll please get in touch and we can look at doing a bog post on it.

Changes to the Coronavirus Job Retention Scheme

We are now a week away from changes to the Coronavirus Job Retention Scheme (CJRS), coming in 1st July 2021. Following July there will be further changes in August, before the scheme finishes at the end of September.

From 1st July the total claimable grant is 70%, up to a maximum of £2,187.50/mth. The employer will have to top up the extra 10%, up to £312.50/mth, as the employee must still receive 80%.

The employer NI and pension contributions still need to be paid by the employer and can’t be claimed back.

The table below outlines the changes coming in.

MayJuneJulyAugustSeptember
Government contribution: wages for hours not worked80% up to £2,50080% up to £2,50070% up to £2,187.5060% up to £1,87560% up to £1,875
Employer contribution: employer National Insurance contributions and pension contributionsYesYesYesYesYes
Employer contribution wages for hours not workedNoNo10% up to £312.5020% up to £62520% up to £625
For hours not worked employee receives80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month

If you are unsure how to calculate the gross furlough pay you should either speak to your payroll bureau, or use the handy HMRC online calculator.

We have helped hundreds of clients with their furlough calculations, queries and claims over the last 15 months and will continue to do so. If you have any questions please feel free to get in touch.

We’ve moved!

We are a little late in announcing that we’ve moved offices…we’ve been a little busy with something called the Coronavirus Job Retention Scheme!

We are still based in the lovely village of Alderley Edge, Cheshire, but now in Barrington House. We also have a new phone number 01625 912099.

We offer payroll services to clients throughout the UK, including workplace pension administration and CIS services!

Re-enrolment Duties

With the last year being so unusual for all the obvious reasons it would be easy to forget your pension duties as an employer.

Every three years employers need to re-enrol any employees who have previously opted out and are eligible on the company re-enrolment date. An eligible employee is a worker aged between 22-SPA, earning over £10,000 per annum. If the employee opted out within the last year they will be exempt from re-enrolment, although they can choose to opt back in if they wished to.

Whether you needed to re-enrol any employees, you will still be required to file a re-declaration of compliance with The Pensions Regulator before the deadline.

Further information regarding re-enrolment can be found on The Pensions Regulator website.

If you have any questions about the services we offer, including workplace pension administration please call

01625 912099, or contact us using the form below.