Payroll Processing

Learning Outcomes

1. Be able to use HMRC approved tools to calculate income tax

1.1 Apply the tax code for an employee from given information I

1.2 Process pre-tax deductions correctly

1.3 Process accurately a variety of Tax Codes using HMRC approved tools:

• standard suffix codes operated on a cumulative or non-cumulative basis

• BR code operated on a cumulative basis.

• NT

• 0T

• D0

• D1

1.4 Identify the authority required to change an employee’s tax code and process the change accurately

2. Be able to determine national insurance contributions to be deducted from gross pay

2.1 Process accurately for NI categories A, C and D, using approved HMRC Tools:

• employee NI contributions

• employer NI Contributions

3. Be able to determine voluntary deductions and non-standard statutory deductions

3.1 Process voluntary deductions in an appropriate way

3.2 Process other statutory deductions:

• Deductions from earnings orders

• Scottish arrestment orders

• Student loan repayments
4. Be able to produce relevant pay period reports

4.1 Produce a P11 or equivalent

4.2 Produce payslips or equivalent, to detail statutory, non-statutory and organisational information regarding employees’ individual pay.

4.3 Produce payment schedules for different methods of making payments to employees

5. Be able to record and reconcile payments and deductions to employees and external agencies

5.1 Produce an internal payroll summary to record and itemise payments and deductions, including employer’s NIC

5.2 Reconcile payments and deductions made from employees pay with the total payroll

5.3 Prepare Employer Payment Summaries in line with the tax authority’s requirements