Transferring employees between payrolls

Produced by Tolley in association with Vince Ashall

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

  • Transferring employees between payrolls
  • Operating more than one payroll
  • Multiple payrolls within the same PAYE reference
  • Transferring employees between payrolls within the same PAYE reference
  • Transferring employees between payrolls with different PAYE references
  • Mergers and successions
  • Benefits in kind ― form P11D
  • Merger
  • Succession
  • PAYE scheme cessation

Transferring employees between payrolls

Operating more than one payroll

Employers may operate more than one payroll for a variety of reasons. These may include:

  1. having different pay frequencies, eg monthly and weekly

  2. to group employees by location, eg a retailer having a payroll for each store

  3. to group employees by occupation, eg a hospital may have all its doctors on one payroll and its nurses and other staff on another

Usually these payrolls will be encompassed within the same PAYE reference, but occasionally an employer may have more than one PAYE reference to cover its various payrolls.

Multiple payrolls within the same PAYE reference

Where an employer decides to operate more than one payroll within a PAYE scheme, there is no requirement to inform HMRC of this. Be aware, however, that this may require the submission of more than one full payment submission (FPS) in order to meet the ‘on or before’ real time information (RTI) requirement. See the RTI ― reporting ‘on or before’ time of payment guidance note. This will certainly be the case if the different payrolls represent differing pay frequencies.

Where reimbursement of statutory payments is being claimed, only one employer payment summary (EPS) is submitted, ie it is one EPS per PAYE scheme regardless of the number of payrolls.

Transferring employees between payrolls within the same PAYE reference

The action to be taken by the employer when transferring employees between payrolls within the same PAYE scheme depends on whether the employee’s payroll / works number (this has various names) has changed and whether this has been notified to HMRC on previous FPS submissions.

HMRC refers to the payroll / work’s number as the ‘payroll ID’ and this terminology will be used in the remainder of this guidance note to avoid confusion.

Although it is not a mandatory item, most payroll systems automatically return the payroll ID on the FPS. Employers need to check what their payroll system does in this respect. See Example 1.

Where an emplo

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