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14 Apr 2020

Glossary

Accounts Office Reference Number

13-digit number required when paying to HMRC the PAYE liabilities; this number is issued at the same time as the Employer’s PAYE reference number but contrary to the latter, this number does not go on documents given to employees.

Certificate of Incorporation

Document that confirms that your company legally exists and provides both the company number and the date it was created.

Contract

A written or spoken agreement outlining the terms of a particular job; check this link for more information about employment contracts.

Companies’ Articles of association

Written company rules approved by the shareholders, directors, and the company secretary (when applicable).

Companies House

Entity whose responsibility is to register limited companies in the UK, store their information and make it available to the public.

Company’s Auditor

Assess financial operations and guarantee that organizations are run efficiently.

Compressed Hours

Compressed hours is a flexible working arrangement where employees work their total contracted hours over fewer days.

Corporation Tax

A tax that all companies must pay based on their level of profits.

Disclosure and Barring Service (DBS)

Service that helps employers make safer decisions regarding recruitment; DBS is responsible for processing requests for criminal records checks and deciding if a person should be placed on or removed from a barred list.

Eligible Jobholders

Employee who must be enrolled to a workplace pension; check this link to find more about the criteria by which an employee is considered a eligible jobholder.

Employers Liability (EL)

Protection required by law that help employers pay compensation if an employee is injured or becomes ill because of the work they perform.

Employee NI

In the United Kingdom, employees have to pay National Insurance contributions, or Employee NI, on all of their earnings and benefits to HMRC. For the tax year 2022/23, starting on 6 April 2022, employee National Insurance rates increase by 1.25% to a total of 13.5% on all earnings above the primary threshold for most employees with NI classification A.

Employers NI

In the United Kingdom, employers have to pay National Insurance contributions, or Employers NI, on all employees’ earnings to HMRC. For the tax year 2022/23, starting on 6 April 2022, employers’ National Insurance rates increase by 1.5% to a total of 15.3% on all earnings above the secondary threshold for most employees.

Employers PAYE Reference Number

Set of letters and numbers given to every company who registers with HMRC as an employer and has set up PAYE; the PAYE reference number goes on all payroll documents given to employees and submitted to HMRC.

Exit Interview

An exit interview is a discussion between a departing employee and a representative of the organisation, aimed at gaining insights for the reasoning behind their departure.

Flexitime

The employee choses when to start and end their working day, whilst still working their contracted daily number of hours.

Full Payment Submission (FPS)

Document employers submit to HMRC about the payments and deductions they have made to their employees; should be submitted on or before the employee’s payday.

Garden Leave

A period of time where departing employees remain on payroll without working, as to prevent them from immediately joining a competitor.

Government Gateway ID

12 digit unique code that allow you to access UK government’s secure online services, including HMRC online services; you can get yours either when you register your company in Companies House or by creating one online.

HM Revenue and Customs (HMRC)

UK tax authority; in charge of collecting taxes, paying benefits, and enforcing tax and customs laws.

Memorandum of Association

Legal statement approved by all initial shareholders agreeing to form the company.

National Insurance

A percentage of salary you pay to qualify for certain benefits and the State pension; note that you must pay National Insurance if you are working in the UK; check National insurance rates and categories for more information.

National Minimum Wage

Minimum amount per hour that almost all employees are entitled to.

Nine Day Fortnight

A 9 day fortnight is a compressed work schedule where employees work full time (or more) hours over 9 days, having every second Friday off.

P11D

Form that an employer completes at the end of the tax year declaring all benefits in kind an employee received throughout the tax year, on or before 6th July.

P45

Form that an employer gives to an employee upon termination of employment.

PAYE (Pay as you earn)

HMRC system to collect Income Tax and National Insurance from employment; check Income Tax rates and Personal Allowances for more information.

 

Real Time Information (RTI)

Improved way of reporting PAYE to HMRC. Employers and payroll providers will tell HMRC about PAYE payments at the time they are made.

SIC (Standard industrial classification of economic activities)

This term aims to provide Companies House with a description of the nature of business of your company. For instance, SIC Code 62012 refers to a Business and domestic software development company.

Statutory Maternity Leave

Time off an employee can take after giving birth; in this situation employees are paid 90% of their weekly earnings before tax for 6 weeks and £151.97 or 90% of their weekly earnings for 33 weeks (whichever is lower) with tax and national insurance deductions; eligible employees can take up 52 weeks maternity leave.

Statutory Maternity Pay

Statutory Maternity Pay (SMP) is a financial benefit provided to eligible employed women who are on maternity leave from their jobs. This system is prevalent in several countries, including the UK, and is designed to support women financially during the period surrounding childbirth and early motherhood. The key aspects of SMP typically include:

Eligibility: To qualify for SMP, a woman usually needs to have been employed by her employer for a certain length of time (e.g., in the UK, you must have worked for your employer continuously for at least 26 weeks by the ‘qualifying week’ – the 15th week before the expected week of childbirth). Additionally, she must earn at least a minimum amount (the ‘lower earnings limit’).

Duration: The duration of SMP varies by country. In the UK, for instance, it can be paid for up to 39 weeks. The first six weeks are usually paid at 90% of the average weekly earnings before tax, and the remaining weeks at a lower statutory rate or 90% of average weekly earnings, whichever is lower.

Notice Requirements: To receive SMP, the employee typically must notify her employer of her pregnancy and her intention to take maternity leave by a specific date.

Proof of Pregnancy: The employee may need to provide proof of pregnancy, such as a medical certificate or a letter from a doctor or midwife.

Payment: SMP is usually paid in the same way and at the same intervals as regular wages, such as monthly or weekly.

Employment Rights: Employees on maternity leave, including those receiving SMP, generally retain their employment rights, such as the right to return to work and accrual of holiday entitlement.

Interaction with Other Benefits: SMP might affect eligibility for other benefits, and the rules can vary depending on the country’s specific laws and regulations.

Employer Reimbursement: In many cases, employers can claim back a significant portion of SMP payments from the government.

It’s important to note that specific details, like the amount paid and eligibility criteria, can vary depending on the country’s legislation. Therefore, it’s always advisable to refer to the relevant government or official labour resources for the most accurate and up-to-date information.

Statutory Paternity Leave

Time off an employee can take after their partner gives birth; in this situation employees are paid £151.97 or 90% of their weekly earnings (whichever is lower) for up to 2 weeks.

Statutory Sick Pay (SSP)

Amount that employers pay to workers who are ill (which can be claimed back from HMRC).

Threshold

Amount that delineates when companies need to register for VAT (currently set at £85.000).

Unique Taxpayer Reference (UTR)

Unique 10-digit code by which HMRC identifies you or your business when dealing with taxes; your UTR will be posted to your company address by HMRC when you register with Companies house; if you did not get your UTR when you register your company, you can request one online; you can find your UTR on all letters from HMRC or within online services; you will need your UTR when contacting HMRC about Corporation Tax and to send your Corporation Tax Return via this link.

VAT Number

9-digit number received when you complete your VAT registration; this code is an identifier when dealing with VAT.

VAT Registration Certificate

Document which confirms that your company is registered for VAT.

VAT Return

Record that you usually submit to HMRC every three months (“accounting period”) recording things like the total sales and purchases of your company, the amount of VAT you owe, the amount of VAT you can reclaim and what your VAT refund from HMRC is.

VAT Taxable Turnover

Total amount of everything your company sold that is not VAT exempt. Click here to know how to calculate VAT taxable turnover and what to include

VAT (Value-added tax)

Consumption tax added to a product or service.

Workplace Pension

Pension scheme employers set to provide their employees with retirement benefits; a part of the employee’s pay may be saved into the pension scheme every payday as a saving for retirement.

Written Statement of Employment Particulars

Document that an employee should receive when start working stating the main conditions of employment; the written statement of employment particulars is composed by a main document called “principal statement” (which need to be provided by the employer on the first day of employment) and a wider written statement (which can be provided within 2 months of the start of employment).

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