Setting up simple Payroll

Here's how to set up a simple payroll and generate a set of payslips for a given tax year.

This article is only for payroll years prior to 2013/14. FreeAgent now uses a new payroll supporting RTI submissions to HMRC. Please see our 2013/14 payroll article, or guide to setting up payroll to get started.

Simple payroll works by calculating a set of payslips for a given Tax Year prior to 2013/14. Both Pay-as-you-Earn Tax and National Insurance Contributions are calculated.

View a payroll and payslips from a previous tax year

To view an existing payroll for a tax year prior to 2013/14 go to My Money, Payroll.

Set up a payroll for a previous tax year

If you want to create payroll records for a tax year prior to 2013/14, choose the appropriate tax year and select Setup Payroll.

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

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 (pre-2013/14)

We are aware of some problems with the simple 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 HMRC's free online calculators, to check any payroll figures prior to 2013/14 in FreeAgent.

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