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Payroll Terminology

12 April 2013 by Crystal HR & Payroll Ltd

When talking to clients, we are often asked by clients who have read something in the news or been sent a letter by HMRC, or their staff have raised a query, what something means, how does it relate to them and what if anything do they need to do.

As a company we believe in communicating at a level our clients can understand.  There is little point in producing reports and talking to our clients in such a way they are left thinking, “what were they talking about?”

Below is a list of common payroll terminology used in or to refer to payroll:

  1. Payroll – A list of all employees receiving, wages or benefits with the amounts due to be paid to each employee
  2. Gross Pay – The total amount of pay due to employees before deductions such as PAYE, National Insurance, Pensions, Give as you Earn
  3. National Insurance – Contributions made to the Government to help you build up entitlement to state benefits such as State Pension
  4. PAYE – Pay as you Earn – A tax you pay on the amount you earn and is paid over to HMRC, subject to any allowances
  5. Tax Code – Represents an amount of (tax) free pay someone is allowed to earn before income tax is deducted
  6. Deductions – Amounts taken off the gross pay such as National Insurance, PAYE, Student Loans
  7. Net Pay – The amount received after deductions have been taken from the Gross pay
  8. SMPStatutory Maternity Pay – An amount of pay employees may be entitled to when taking time off to have a baby
  9. OSPP – Ordinary Statutory Paternity Pay – An amount of pay to an employee if their partner adopts or has a baby
  10. SSPStatutory Sick Pay – An amount of pay an employee may be entitled to when taking time off for illness
  11. SHLStatutory Holiday Leave – An amount of pay all workers are entitled to when taking time off
  12. P45 – A form used by employers to detail how much income tax has been paid on employee’s wages/salary.  Issued to staff leaving an employers employment
  13. P14 – This is an end of year summary of National Insurance, PAYE and statutory payments made in the yax year.  This form must be submitted to HMRC
  14. UTR NumberUnique Tax-Payer Reference – When a company record is first setup, the HMRC computer allocates a ten, (10), digit reference number.  This number is used by the company for the duration of its existence.  The same procedure applies to partnerships and individuals.
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