How to set up an automatic payroll
Robert Campbell explains how GPs and PMs can update a manual payroll to an automatic one before HMRC makes it compulsory to submit PAYE reports online in April 2013.
From April 2013 you will need to submit PAYE reports on line via the Government Gateway.
Real Time Information (RTI) is aimed at improving the operation of PAYE (Pay As You Earn).
Currently, if you’re an employer operating PAYE you submit an end of year return to HM Revenue & Customs (HMRC).
In future each time you pay an employee you’ll submit details about employee pay and deductions to HMRC. Most employers will start operating the new PAYE process from April 2013.
Like many PMs and GPs, I have been using a payroll software system for over 15 years and more recently have submitted year-end returns, and joiner and leaver forms online using the Government Gateway.
But recently I worked in a practice that still uses a manual payroll. I wonder how many more practices there are out there who still use the old-fashioned wages book.
By next April 2013 you will need to have a payroll software system in place. There are many software choices but probably the most common ones used in general practice are Iris GP Payroll and Sage Payroll. Sage comes in different versions depending on the number of staff you employ. Iris is specifically designed for GP Practices, whereas Sage would need more effort in setting up for instance pensions.
How I did it
Here is a basic guide to the information you will need to muster to set up a payroll software system - you may want to skip this section if it seems familiar.
The information I required ran as follows:
- Practice details - Name of employer, Inland Revenue employer’s reference, Government Gateway passwords
- Personal details - Name, job title, address, date of birth, start date, incremental date, national insurance number, NIC code, tax code, annual salary or hours per week and normal hourly rate and overtime rate.
- Pensions details - NHS Superannuation Scheme, membership number, whole time equivalent if part time, contributions rate (varies according to annual salary)
- Banking details
- Payroll details - Manual pay sheets for year to date and details of overtime, additional hours, attachment of earning, travelling expenses
It will also be useful to have a practice salary scale as a reference point. Not all practices use the Agenda for Change scalestherefore it is necessary to keep the old Whitley Council scales up to date to keep in line with cost of living increases.
For a practice with 20 staff it took me about a week, on and off, to enter the data for all of the staff and then run the payroll for each month back to the 1 April 2012. When I compared the results with the manual payroll there were only minor differences in the calculations.
One approach is to run the manual and computer payroll in shadow for the first year but I’m not sure that is necessary once you are confident with the calculations.
The new system saves a lot of time. In my view you should be able to run the payroll, print out pay slips, Inland Revenue returns and NHS pension payment sheets in, say, the space of one morning’s work, and that includes setting up the bank payment; whereas using a manual system would take at least a day a month.
Robert Campbell is a retired practice manager and now works as a consultant to PMs at kingfisherPM.com.