By Jacqui Smith, Payroll Manager at BAS Associates
When most people think about payroll, they picture a straightforward task: pay your team the right amount, on time, and everyone’s happy. If only it were that easy!
As the Payroll Manager at BAS Associates, I can confidently say that payroll is a deceptively complex part of running a business. And getting it wrong can cost you far more than just time and stress.
The real cost of payroll mistakes
Since 2020, HMRC has issued over £75 million in avoidable payroll penalties, according to IFA (Institute of Financial Accountants). That’s £75 million lost to missed deadlines, inaccurate filings, and compliance failures. These penalties are often completely avoidable… but only if you understand the ins and outs of payroll legislation.
Some common pitfalls include:
- Missing Real Time Information (RTI) filing deadlines
- Incorrectly calculating PAYE, National Insurance, or pensions
- Failing to report or pay Class 1A NICs on P11D benefits
- Not updating HMRC when employees leave or change details
- Using incorrect director salary strategies
Let’s break a couple of those bullet points down into more detail:
Why RTI Filing Deadlines matter
Real Time Information (RTI) filings must be submitted to HMRC every time you pay employees, on or before payday. But many businesses slip up by filing late due to holidays, illness, system issues, or simply misunderstanding the rules. Others forget to submit an Employer Payment Summary (EPS) if no one was paid that month. The result?
Penalties of £100–£400 per month, inaccurate PAYE records, issues with employee tax codes or Universal Credit, and interest on unpaid PAYE. Often, the first sign something’s wrong is a penalty letter from HMRC.
Director Salaries – Getting the balance right
For limited companies, especially those with director-only payrolls, it’s crucial to calculate the most tax-efficient salary and dividend split. This changes every tax year with new thresholds for personal allowance, National Insurance, and dividend tax. We help directors find the sweet spot that maximises tax efficiency while keeping them compliant.
P11Ds and Benefits in Kind: Not just a formality
Benefits such as company cars, health insurance, or interest-free loans all have to be declared and taxed. Incorrect or late P11D submissions can lead to penalties and interest charges. The deadline for submission is 6 July following the end of the tax year, and Class 1A NIC must be paid by 22 July if paying electronically.
It’s more than just numbers – it’s your time
Think of payroll like an iceberg. What you see, i.e. producing payslips, is just the tip.
Below the surface, there’s:
- Keeping up with evolving HMRC guidance
- Statutory pay calculations (SSP, SMP, SPP, etc.)
- Pension auto-enrolment duties and re-enrolment checks
- Holiday accrual calculations
- Employee queries and leavers administration
- Employer payment summary (EPS) submissions
- Reporting student loans, attachment of earnings, and more
If you’re handling this in-house, that’s valuable hours lost that you could be spending on growing your business.
What we do at BAS
At BAS Associates, our payroll service is designed to take every element of payroll off your plate:
✅ We manage the full PAYE process
✅ We calculate tax-efficient salaries and dividends for directors
✅ We complete and submit all HMRC filings on time
✅We ensure you claim all allowances you’re entitled to (which could be £10,500 a year you’re missing out on!)
✅ We handle P11Ds, holiday pay, and pension compliance
✅ We advise on PAYE liabilities and deadlines
✅ We can make payments directly to your team
✅ We provide an online portal for payslips and payroll documents
✅ We offer a holiday booking app to track leave and absences
Our goal is simple: keep you compliant, efficient, and penalty-free…while saving you time.
Don’t let payroll mistakes hold you back
Whether you have one employee or fifty, don’t underestimate payroll. It’s not just a back-office admin task, it’s a legal obligation that can affect your finances, your staff morale and your business reputation.
If you’re unsure whether your payroll is being managed correctly, or if it’s taking up too much of your time, let’s talk. We’re here to help.
📞 Call us today on 01296 681341
🌐 Learn more at www.basassociates.co.uk
0 Comments