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Mercans CountryIntel ® United Kingdom Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in the UK

Employers normally operate PAYE (pay as you earn) as part of payroll. Payroll and deductions need to be made to HM Revenue and Customs’ (HMRC) system which collects income tax and national insurance from employment.

Doing Business in the UK

Traditionally, the UK has been very welcoming of foreign investors and businesses which makes it an attractive place for overseas businesses and entrepreneurs to conduct their operations.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in the UK is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banks are open from Monday to Friday 9am to 4pm.

Working Week

The standard working week is 40 hours per week usually worked from Monday to Friday

Labor Law

In the UK, individuals can be classified as employees, workers or independent contractors. Each classification carries different rights and protections. All employees and workers are entitled to a statement that outlines their conditions of employment. If an employee is dissatisfied about an issue, a claim can be brought before the Employment Tribunal.

Main Industries

Services, manufacturing, construction and tourism

GDP Growth

1.398%

Dates & Numbers

dd/mm/yyyy

Official State Name

United Kingdom of Great Britain and Northern Ireland

Population

67.22 million

Capital

London

Major Languages

English, Welsh, Gaelic

Currency

Pound Sterling

Internet Domain

.uk

International Dialing Code

+44

United Kingdom
London, GB
11:29 pm, January 25, 2022
2°C
overcast clouds

Payroll

Payroll refers to the compensation a business pays its employees for a set period and on a given date. Payroll management must take into account all relevant benefits and deductions, keeping in mind the minimum wage applicable. It is worth noting that, in the UK, there is no legal right to pay for working extra hours.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for seven years

Reports

28 days paid sick leave

Annual Leave

28 weeks sick leave

Sick Leave

52 weeks of paid maternity leave and 26 weeks of paid paternity leave

Maternity & Paternity Leave

1 week

Employee Termination

No statutory provisions for the 13th salary

13th Salary

£8.91 per hour for employees aged 23 and above

Minimum Wage

Employers are not forced to pay workers for doing overtime.

Overtime

Half a week's pay for each full year under 22. one week's pay for each full year for 22 or older, but under 41.

Final Pay

Tax and Social Security

In the UK, most individuals get a Personal Allowance of tax-free income, that is, the amount of income an individual can have before tax is paid. An individual can claim the basic State Pension when they reach the State pension age.

Tax

In the UK, tax is paid by individuals on income received which includes wages, benefits, pension and any savings interest. Income tax is to be paid on income above an individual’s Personal Allowance. If employed, the employer will deduct income tax from wages paid.

19%

Corporate Income Tax

20%

Income Tax Rate

20%

Sales Tax

20%

VAT

Taxable Income from £12,570
Personal Income Tax

Social Security

The Department for Work and Pensions (DWP) administers the State pension and a range of working age, disability and ill health benefits.

27.8%

Social Security Rate

13.8%

Social Security Rate for Employers

14%

Social Security Rate for Employees

Employment Law

UK employment laws seek to ensure that both employers and employees are protected through legislation on dismissal, holidays, pay, discrimination and more.

Employment Agreement

All employees have an employment contract with their employer. This sets out the conditions of employment, the duties of the employee as well as the rights and responsibilities of both parties. It is important to note that once a job offer is accepted, there is a contract with the employer. An employment contract does not have to be written down.

Working condition

All employees have a legal right to request flexible working and must have worked for the same employer for at least 26 weeks to be eligible for this. By law, workers cannot work more than 48 hours a week on average. This is sometimes called the ‘working time directive’. Exceptions include where 24 hour staffing is required, in security or surveillance, domestic servant in a private household.

Leaves

Almost all workers are legally entitled to 28 days paid holiday a year (known as statutory leave entitlement or annual leave). This includes agency workers, workers with irregular hours and those on zero-hour contracts. Statutory paid holiday entitlement is limited to 28 days.

Employment termination

An employee dissatisfied over pay, dismissal or discrimination may take an employer to an employment tribunal. The employer may be required to pay compensation or reinstate the employee if they lose the case.

1 week

Minimum notice period for terminating employment

11 days

Total number of public holidays

40

Working hours per week

3-5 days

Total number of days for Compassionate and Bereavement Leave

Immigration

UK Visas and Immigration makes decisions on who has the right to visit or stay in the country, with firm emphasis on national security.

Residency permits

An individual’s UK resident status determines whether they pay tax in the UK on foreign income earned. Residents normally pay UK tax on all their income, whether from the UK or abroad.

Work Permit validity

3 years

Required Documents

UK visa application form

Two photographs

A valid passport

Proof of financial means (such as bank statements and payslips)

Proof of accommodation

Detailed travel itinerary

Tuberculosis test results

Biometric information

UK visa invitation letter (If applicable)

Receipt indicating UK visa fees are paid

Certified translations of any document that is not in either English or Welsh

Compliant, reliable, error-free and touchless payroll in United Kingdom

Build the best team and hire top talent compliantly in United Kingdom. Get in touch with United Kingdom payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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