If you run your payroll yourself you’ll need to report your employees’ payments, along with the deductions for income tax and National Insurance, to HMRC on or before each payday. If you use a payroll provider, they’ll do this for you.
Running your payroll
You can run the payroll yourself using your payroll software or employ a payroll provider to do it for you, depending on the size of your business and the resources you have. Whichever method you choose, you’ll need to collect and keep details of all your employees.
NOW: Pensions operates a net pay scheme where pension contributions come out of employees’ pay before income tax is taken off. You’ll need to make sure your system is set up to calculate pension contributions on your employees’ gross (before tax) pay.
This means taxpayers automatically get full tax relief – they don’t pay any income tax on their pension contributions.