A

Agency Worker

An individual supplied by a recruitment agency to work temporarily for a business. Payroll and employment rights may vary depending on the contractual arrangements.

Apprenticeship Levy

A UK employer charge designed to fund apprenticeship training. Employers with an annual pay bill above the HMRC threshold are required to contribute a percentage of their payroll costs.

Attachment of Earnings Order (AEO)

A legal order requires an employer to deduct money from an employee’s wages and pay it to a court or government body to repay a debt.

Auto-Enrolment

A legal requirement for employers to automatically enroll eligible employees into a qualifying workplace pension scheme and make pension contributions.

B

BACS

BACS (Bankers’ Automated Clearing Services) is the UK’s electronic payment network used to process salary payments, supplier payments, and direct debits.

Benefits in Kind (BIK)

Non-cash benefits provided by an employer, such as private medical insurance or company cars, which may be subject to Income Tax and National Insurance.

Bonus Payment

Additional earnings paid to employees based on performance, company profits, or other agreed criteria.

C

CIPP

The Chartered Institute of Payroll Professionals, the UK’s professional body for payroll, pensions, and reward professionals.

CIS (Construction Industry Scheme)

A HMRC scheme requiring contractors to deduct tax from payments made to subcontractors in the construction industry.

Cloud Payroll Software

Payroll software delivered via the internet, allowing employers and payroll teams to access payroll information securely from any location.

D

Dedicated Payroll Expert

A payroll professional assigned to manage and support a client’s payroll requirements.

Deductions

Amounts deducted from an employee’s gross pay, such as Income Tax, National Insurance, pension contributions, student loans, or Attachment of Earnings Orders.

E

Employee Self-Service (ESS)

A secure online portal allowing employees to access pay slips, P60s, personal information, and payroll documents.

Employer Payment Summary (EPS)

A payroll submission sent to HMRC to report adjustments such as statutory payment recovery, apprenticeship levy liabilities, or periods where employees have not been paid.

Employment Allowance

A government incentive enabling eligible employers to reduce their annual Employer National Insurance liability.

F

Faster Payments Service (FPS)

A UK payment system enabling near-time transfers between bank accounts, commonly used for urgent payroll payments.

Full Payment Submission (FPS)

The payroll report is sent to HMRC on or before payday as part of Real Time Information (RTI) reporting.

Full-Time Equivalent (FTE)

A method used to measure employee workload based on the hours worked compared to a full-time employee.

G

GDPR

The UK General Data Protection Regulation establishes rules for collecting, storing, processing, and protecting personal data.

Gender Pay Gap Reporting

A statutory reporting requirement for qualifying employers to publish information about differences in average earnings between male and female employees.

Gross Pay

The total pays an employee receives before any deductions are applied.

H

HMRC

HM Revenue & Customs, the UK government department responsible for tax collection, PAYE, National Insurance, and payroll-related compliance.

Holiday Pay

The statutory or contractual payment employees receive while taking annual leave.

I

IR35

Off-payroll working rules are designed to ensure contractors working through intermediaries pay broadly the same taxes as employees when appropriate.

J

Journal

A payroll journal accounting report used to post payroll costs, tax liabilities, pensions, and deductions into accounting software.

L

Leaver

An employee who leaves employment and requires final payroll processing and the issue of a P45.

Living Wage

A voluntary wage rate promoted by the Living Wage Foundation, separated from the statutory National Living Wage.

N

National Insurance Contributions (NICs)

Contributions paid by employees and employers to fund state benefits and the State Pension.

National Living Wage

The statutory minimum hourly pay rate for eligible workers, set by the UK Government.

National Minimum Wage

The minimum hourly pay rates employers must legally pay workers based on age and eligibility.

Net Pay

The amount an employee receives after all deductions have been made.

NEST

The National Employment Savings Trust, a workplace pension provider commonly used for auto-enrolment.

P

P11D

A form used to report employee expenses and Benefits in Kind to HMRC when they are not payrolled.

P45

A document provided when an employee leaves employment, detailing earnings and tax paid during the current tax year.

P60

The annual certificate shows an employee’s total pay and deductions for the tax year.

PAYE

Pay As You Earn, the system used by employers to deduct Income Tax and National Insurance from employee earnings.

Payroll Bureau

An organisation that provides outsourced payroll processing services on behalf of employers.

Payroll Outsourcing

The process of delegating payroll administration and compliance responsibilities to a specialist payroll provider.

Payrolling Benefits

A method of taxing employee benefits through payroll instead of reporting them separately on a P11D.

Pension Auto-Enrolment

The legal process of enrolling eligible employees into a workplace pension scheme.

Pension Provider

An organisation that manages workplace pension schemes and employee pension contributions.

R

Real Time Information (RTI)

The HMRC reporting system requires payroll data to be submitted electronically each time employees are paid.

S

Salary Sacrifice

An arrangement where an employee agrees to exchange part of their salary for a non-cash benefit, such as pension contributions.

Starter Checklist

An HMRC document is completed when a new employee does not provide a P45.

Statutory Maternity Pay (SMP)

Government-backed pay provided to eligible employees during maternity leave.

Statutory Paternity Pay (SPP)

Government-backed pay provided to eligible employees taking paternity leave.

Statutory Sick Pay (SSP)

The statutory minimum sick pay employers must provide to eligible employees when absent due to illness.

Student Loan Deduction

Repayments collected through payroll for employees with qualifying student loans.

T

Tax Code

A code issued by HMRC that determines how much Income Tax should be deducted from an individual’s pay.

Third-Party Payments

Payments made through payroll to organisations other than the employee, such as pension providers, HMRC, unions, or courts.

Timesheet

A record of hours worked by an employee, used to calculate pay and manage attendance.

W

White Label Payroll

A payroll service delivered by a payroll provider but branded and presented as the service of another organisation, typically an accountant or consultancy.

Workplace Pension

A pension scheme provided by an employer to help employees save for retirement.

Workplace Pension Compliance

The employer’s legal responsibilities relating to auto-enrolment, pension contributions, and reporting obligations.

Quick note: This is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.