Employers in the UK face a wide range of legal obligations when it comes to payroll and workplace pensions. Ensuring compliance not only protects your business from penalties, but also supports your workforce and helps maintain good employment standards.
Payroll Responsibilities
When you employ staff, you must operate the Pay As You Earn (PAYE) system. This means:
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Registering as an employer with HM Revenue & Customs before the first payday.
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Running payroll using software recognised by HMRC and submitting Real Time Information (RTI) reports each pay period.
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Deducting income tax and National Insurance (NI) contributions from employee pay and paying employer NI contributions. From the 2025/26 tax year the secondary Class 1 employer NIC threshold is reduced and the rate is set to increase to 15 %.
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Ensuring accurate payslips are issued and that all required records are retained for inspection by HMRC.
Pension Auto-Enrolment and Workplace Pensions
On the pensions front, employers must fulfil the duties set out under the auto-enrolment regime:
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Assess all workers for eligibility from your “duties start date” (typically the date your first employee starts).
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Enrol eligible jobholders into a qualifying pension scheme and begin contributions. For 2025/26, minimum total contributions remain at 8 % of qualifying earnings, of which the employer must contribute at least 3 %.
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Provide written communications to all staff about their pension rights and any opt-out options within six weeks of the duties start date.
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Declare compliance with The Pensions Regulator within five months of your duties start date, and every three years thereafter re-assess and re-enrol eligible staff.
Keeping It All in Order
Managing payroll and pension obligations requires ongoing attention:
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Ensure your payroll software is up-to-date and able to handle the current tax year rules.
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Schedule your pay runs, cut-off times, and approvals to avoid errors in deductions or pension enrolment.
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Stay informed on upcoming changes—such as mandatory payrolling of benefits-in-kind from April 2026—which may affect your processes.
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Maintain detailed records: employee assessment reports, communications, contribution logs and opt-out requests must be available for inspection by regulators.
How Lucas Prestige Accountants Can Help
We provide expert support for UK employers across all payroll and pension obligations. Our services include:
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Employer registration for PAYE and auto-enrolment
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Setup of compliant payroll systems and RTI reporting
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Pension assessment, scheme selection, and enrolment support
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Ongoing payroll and pension administration to ensure regulatory compliance and avoid penalties
If you’re employing staff or looking to ensure your payroll and pensions are properly handled, contact Lucas Prestige Accountants today for professional guidance and peace of mind.