Outsourcing Payroll Has Become Far More Popular In Recent Years

October 27, 2021

Over the last few years, payroll outsourcing in the UK has become more and more popular - and not just for small and medium sized business but larger corporations as well. In particular, in 2013, the legislation changed when HMRC introduced RTI (Real Time Information) to the PAYE system and that meant that employers now have to submit tax deductions and reports every time an employee is paid and not just at the end of the tax year. So, if employees are paid weekly, that is 52 returns every year! Even for monthly paid employees the number of returns was multiplied by 12.

This led to a boom in payroll outsourcing in the UK, and not just in the UK either. Deloitte reported recently that 47% of organisations in Europe, the Middle East, and Africa are outsourcing all of their payroll.

Of course, some businesses do still handle all their payroll in-house, but this means that you need to hire a payroll manager. In many businesses, there is simply not enough work for a full-time in-house payroll manager, and that means that it is necessary to train an existing employee to carry out the payroll in addition to their other duties. So, if it takes two days week to handle the payroll, that employee cannot be doing any other work during that time. Either way, there is a labour cost involved.

Then there is another problem with carrying out payroll in-house and that is that whoever is undertaking the payroll will also take holidays. They may go sick for several weeks. They might just quit. What do you do when any of that happens? Your other employees can’t be expected to wait until that individual comes back or is replaced. And HMRC won’t wait either.

Payroll Errors

While on the subject of HMRC, another issue with carrying out payroll in-house is that of payroll errors. If you make errors in tax returns or make under-payments, HMRC will issue you with financial penalties, and such penalties can mount up considerably. It is true that the employer is responsible whether or not the payroll is outsourced, but when you use a payroll bureau it is their full-time job, and they have expert staff who keep up to date with all of the changes in legislation. In practice, you are far more likely to have payroll errors when it is done in-house rather than when it is outsourced.  

Some payroll bureaux, such as ourselves at PayCheck, also provide online payroll services. This means that you can check your payroll information wherever you are on a smartphone or tablet. If you spend a lot of time away from the office, visiting customers, or go on business trips, our online payroll service could well be the best solution.  

In addition, when you carry out payroll in-house, you have to invest in training an employee to do the work if you don’t have sufficient for a payroll manager. If you employ a payroll manager, you are going to have to pay top dollar for a good one. You also have to invest in software that requires maintenance, and you have to print payslips and write out cheques or pay employees direct. By contrast, at PayCheck, we can do all of this for you including sending BACS payments to your employees and to HMRC on your behalf, since we are a BACS registered bureau.

When you use our services to run your payroll, you will save all of the hassle of doing it in-house and you will save money too. We will agree a flat-rate fee to cover everything, and there are no hidden extras either.

This article was written by
PayCheck Team
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