Setting up simple Payroll

FreeAgent payroll is pretty basic. The complexities of Payroll rules, especially in the UK, are fiendish but also irrelevant for the majority of our users.

To set up Payroll go to My Money > Payroll.

Choose the appropriate tax year (if you have more than one available) and click the 'Setup Payroll' button.

Enter your tax code, a starting date and the total salary to be paid (gross i.e. before taxes). This will calculate a set of Payslips for a given Tax Year. Both Pay-as-you-Earn Tax and National Insurance Contributions are calculated.

NI Contribution calculations can be done in accordance with rules for Director's Class 1 National Insurance contributions, or as normal employees (which you can choose to do even if you are a Director).

Employee NICs are distributed equally throughout the year, whereas Directors' ones are calculated based on pay-to-date.

Known issues with FreeAgent's payroll engine

We are aware of some problems that can crop up with the payroll engine, for example:

• Both employee's and employer's National Insurance can be 3p out each month.
• If a director starts part way through a tax year his/her National Insurance may be wrong.
• Leavers may not be handled correctly.

If you're in any doubt, always use another programme, such as HM Revenue's free CD-ROM, to check your payroll calculations.