Adoption Leave
Time off work granted to employees who adopt a child, similar to maternity or paternity leave.
Allowance
A fixed sum added to an employee's salary for specific purposes, such as travel or meals.
Apprentice
An employee in training, often younger, who earns a reduced wage under government-approved apprenticeship standards.
Auto-enrolment
A legal requirement in the UK where employers must automatically enrol eligible employees into a workplace pension scheme.
BACS (Bankers' Automated Clearing Services)
A system used for making electronic payments directly from one bank account to another, often used for payroll.
Basic Pay
The fixed amount an employee earns before any extras or deductions.
Benefit in Kind (BIK)
Non-cash perks provided to employees (like a company car) that may be taxable.
CIS (Construction Industry Scheme)
A scheme under which contractors deduct money from subcontractors’ payments and pass it to HMRC.
Contractor
Someone hired on a temporary basis, often self-employed or via an agency.
COTAX
HMRC's system for managing Corporation Tax for companies.
Cumulative Tax Code
A tax code that accumulates tax allowances over the tax year, adjusting tax paid based on previous earnings.
Cut-off Date
The final date by which payroll changes must be submitted to be included in that pay run.
Directors’ National Insurance
Special rules apply for directors when calculating National Insurance, often on an annual earnings basis.
Employee
A person who works under a contract of employment and is on your payroll.
Employment Allowance
A relief that allows eligible businesses to reduce their annual National Insurance bill by up to a set amount.
Employer’s National Insurance (NI)
The portion of NI contributions paid by the employer to HMRC.
Employer Payment Summary (EPS)
A report sent to HMRC to reclaim statutory payments or declare no payments are due.
Freeport
Designated areas where businesses can benefit from tax and customs reliefs.
FPS (Full Payment Submission)
A report sent to HMRC every time employees are paid. Includes pay, tax, and NI info.
GDPR (General Data Protection Regulation)
A legal framework that governs how personal data should be collected, processed, and stored.
Government Gateway
The login system for accessing UK government services online, including HMRC.
Gross Pay
Total pay before deductions (includes overtime, bonuses, etc.).
HMRC (HM Revenue and Customs)
The UK’s tax, payments, and customs authority.
Holiday Pay
Wages paid to employees when they take time off for holidays, calculated by statutory or contract rules.
Income Tax
A tax on earnings paid to HMRC based on PAYE (Pay As You Earn).
Job Retention Scheme
Also known as furlough — government support for paying wages during specific periods (historically during COVID-19 — which ended on 30th September 2021).
Leave
Time off work, including holiday, sick leave, maternity/paternity, or compassionate leave.
Lower Earnings Limit (LEL)
The minimum level of earnings needed to qualify for certain state benefits and NI contributions.
Minimum Wage / National Living Wage
The lowest legal wage you can pay employees, varying by age and employment type.
Maternity / Paternity Pay
Statutory payments made to employees on leave due to childbirth or adoption.
MAT B1
A medical certificate confirming pregnancy and expected due date, used to claim maternity pay.
Month 1 Tax Code
A non-cumulative code where tax is calculated monthly with no reference to previous earnings.
Month End Summary
A summary report of payroll and tax figures for a given month.
National Insurance (NI)
A system of contributions paid by workers and employers that fund state benefits and pensions.
National Insurance Number Verification Request (NVR)
A check made to confirm an employee’s NI number with HMRC.
Net Pay
What the employee actually takes home after all deductions.
NIC (National Insurance Contribution)
A tax that pays for state benefits and pensions, paid by both employees and employers.
Non-Cumulative Tax Code
Tax is calculated on a pay-period basis without considering previous earnings or tax paid.
PAYE (Pay As You Earn)
The system used to collect Income Tax and NI from employees’ wages.
P9D
A form (now obsolete) used to report benefits and expenses for employees earning below the P11D threshold.
P11
A record of an employee’s pay and deductions maintained by employers.
P11D
A form detailing any benefits in kind provided to employees.
P30
A payslip summarising the total PAYE and NI owed to HMRC.
P32
A summary of the total PAYE and NI liability for a tax period.
P45
A form given when an employee leaves, showing their pay and tax details for the year so far.
P60
A form issued at the end of the tax year, summarising an employee's total pay and deductions.
Payroll
The process of calculating and distributing wages and deductions.
Pension Deduction Types
Different methods of calculating pension contributions (e.g. relief at source, net pay arrangement, salary sacrifice).
Primary Threshold (PT)
The earnings level above which employees start paying Class 1 NI contributions.
Qualifying Earnings (Pension Deduction)
A band of earnings used to calculate minimum pension contributions under auto-enrolment.
Real Time Information (RTI)
The system HMRC uses to receive payroll data every time employees are paid.
SAP (Statutory Adoption Pay)
Payments made to eligible employees who are on adoption leave.
Secondary Threshold (ST)
The earnings level above which employers must start paying Class 1 NI.
Small Employers’ Relief
A higher rate of recovery for statutory payments (e.g. SMP, SSP) available to small employers.
Sick Pay (SSP)
Statutory payments made to employees who are off sick for more than 3 days.
SMP (Statutory Maternity Pay)
Payments made to eligible employees who are on maternity leave.
SPBP (Statutory Parental Bereavement Pay)
Payments made to eligible employees after the death of a child.
SPL (Shared Parental Leave)
Leave that parents can share following birth or adoption, allowing flexible childcare arrangements.
SPP (Statutory Paternity Pay)
Payments made to eligible employees on paternity leave.
Starter Checklist
A form used when someone starts employment without a P45.
Student Loans
Repayments collected through payroll based on employee earnings and loan plan type.
Tax Code
Used by employers to calculate how much Income Tax to deduct from an employee’s pay.
Timesheet
A record of hours worked used for calculating pay, especially for hourly or freelance workers.
Umbrella Company
A third-party company that employs contractors and handles their payroll and taxes.
Upper Earnings Limit (UEL)
The limit above which a lower rate of employee NI is applied.
Upper Secondary Threshold (UST)
A NI threshold used mainly for under-21s and apprentices, where employers pay reduced NI.
UTR (Unique Taxpayer Reference)
A 10-digit number issued by HMRC to identify individual taxpayers and businesses.
Week 1 / Month 1 Tax Code
A non-cumulative code used to calculate tax based only on the current pay period.
Week 53 / 54 / 56
Extra weekly pay periods in leap years, potentially requiring separate tax treatment.
Workplace Pension
A pension scheme arranged by the employer. Employees are auto-enrolled and contribute a percentage of their pay.
