If you’re an Irish business setting up shop in the UK, congratulations! But before you hire your first employee across the water, it’s worth getting to grips with the UK’s payroll landscape. While the UK and Ireland may share a lot of things, payroll rules isn’t one of them.
Here’s a practical guide to help you understand the key differences—and why partnering with a payroll expert (like us!) can make all the difference.
The UK Tax Year: A Calendar All Its Own
Unlike Ireland’s straightforward calendar year, the UK tax year runs from 6 April to 5 April. Each tax month also follows this pattern—starting on the 6th and ending on the 5th of the following month. It’s a historical quirk, but one that has real implications for payroll scheduling and reporting.
PAYE Registration: Your First Step
To operate payroll in the UK, you’ll need to register with HMRC for a PAYE reference number. Irish companies can apply for this without setting up a UK entity, but the application can only be completed by post or phone. It’s important to get this right from the outset to avoid delays in paying your employees.
Real Time Reporting: No Delays Allowed
The UK operates a Real Time Information (RTI) system, which means you must report payroll data to HMRC on or before each payday. This includes tax, National Insurance, and other deductions.
There are two key submission types:
- Full Payment Submission (FPS) – required for every pay run.
- Employer Payment Summary (EPS) – used for adjustments or special reporting.
It’s also essential that your payroll software is HMRC-recognised and RTI-compliant. Without this, you won’t be able to submit the required data, and non-compliance can lead to penalties.
Making Payments in GBP: Timing Is Everything
Once payroll has been processed and reported, the next step is making payments—on time and in the right currency.
- Employees must be paid on the agreed payday, most commonly in GBP.
- HMRC liabilities (including PAYE tax and National Insurance) must be paid by the 22nd of the following month if paying electronically.
- Third-party deductions (such as pension contributions, attachment of earnings orders, or charity donations) must also be paid by the relevant due dates.
Late or incorrect payments can result in penalties, interest charges, and reputational damage. It’s crucial to ensure your payment processes are aligned with UK banking timelines and currency requirements.
P60s, P45s, and Paper Trails
At the end of the tax year, employees still on your books must receive a P60, summarising their total pay and deductions. If someone leaves before 5 April, they’ll need a P45. These are statutory documents and must be issued on time.
Regional Tax Codes: One UK, Several Systems
Employees in Scotland and Wales may have different tax codes depending on their residency. Scotland, in particular, has introduced additional tax bands, so it’s important to ensure your payroll system can handle these variations.
Pensions Auto-Enrolment: A Legal Must
Since 2012, UK employers have been required to auto-enrol eligible employees into a qualifying pension scheme. Employees must be assessed each pay cycle, and those who opt out must be re-enrolled every three years. The Pensions Regulator oversees compliance—and the penalties for getting it wrong can be steep.
National Insurance: More Than Just a Deduction
National Insurance (NI), or UK social security, is paid by both employees and employers. There are exemptions (e.g. under 16s, pensioners) and reliefs (e.g. for under-21s, apprentices, veterans, and businesses in Freeports or Investment Zones). Most employers can also claim Employment Allowance, which offsets up to £10,500 of the NI bill.
Minimum Wage: Age-Based and Strictly Enforced
The UK minimum wage varies by age:
- 21 and over: £12.21/hour from April 2025
- Lower rates apply for 18–20s, 16–17s, and apprentices in their first year
Rates are updated annually, the latest can be found here on the gov.uk website.
Getting this wrong can be costly. Fines start at 200% of the underpayment, and HMRC regularly publishes a “name and shame” list of non-compliant employers.
Northern Ireland: Same, But Sometimes Different
While Northern Ireland follows most UK payroll rules, employment law is devolved. For example, Neonatal Care Leave and Pay was introduced in April 2025 across the UK—but has not yet been enacted in Northern Ireland. Always check for regional variations.
Statutory Leave: Know the Rules
Maternity, paternity, and sick pay all come with specific eligibility rules, statutory rates, and reporting requirements. Maternity pay, in particular, includes additional considerations—such as maintaining employer pension contributions and reflecting any pay increases during leave.
Benefits in Kind: Changes on the Horizon
Mandatory payrolling of Benefits in Kind (BIKs) is due to come into effect in April 2027. Until then, employers must submit P11D forms for each employee receiving taxable benefits, and a form P11D(b) for declaration of the employer’s National Insurance liability. Voluntary payrolling is in place for some benefits but still requires P11D(b) reporting.
Payroll Compliance: It’s More Than Just Numbers
As in Ireland, payroll in the UK is about more than just paying people on time. It involves strict compliance with tax law, employment legislation, and data protection regulations. GDPR applies, and employees must receive their payslip on or before payday.
Final Thoughts
UK payroll is full of quirks, deadlines, and legal obligations. It’s not impossible—but it is complex. That’s where we come in.
Whether you’re just getting started or scaling up, we can take the stress out of UK payroll so you can focus on growing your business.
Thinking of setting up in the UK? Let’s talk. We’ll make sure your payroll is one less thing to worry about. Get in touch here today.