Payroll record keeping

By Tolley in association with Vince Ashall
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The following Employment Tax guidance note by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Payroll record keeping
  • Pay
  • Pay related records
  • Retention of Records

Under SI 2003/2682, reg 97, “...an employer must keep, for not less than 3 years after the end of the tax year to which they relate, all PAYE records which are not required to be sent to [HMRC]...”. Reasons for keeping the records include:

  • being able to calculate tax and NI
  • ensuring compliance with legislation
  • proving that employees have been paid any statutory pay that they are entitled to

The GOV.UK website  gives guidelines on the retention period for other payroll related records.

Records which must be kept include those relating to pay rates, tax and NI deductions. Employers should keep records of training, employment history and terms and conditions of employment.

Although payroll records should be retained for the current tax year plus the previous three years, many employers keep these records for six years. A major reason for this is that some payroll records, such as business expenses claims, are also ‘accounting’ records. Under the Companies Act 2006, accounting records need to be kept for six years following the end of the company’s accounting period.

Basic information needs to be kept in relation to employees. As a minimum, this should include:

  • name: surname and full forenames
  • home address
  • date of birth
  • national insurance number
  • gender: some employers are wary of collecting this, in case it breaches certain aspects of equality legislation; a person’s gender is required as it is a mandatory data item on many returns that have to be subm

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