Payroll and Benefits Guide - United Kingdom

United Kingdom
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Currency

Pound Sterling
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Capital

London
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Employer Taxes

17.30%
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Date Format

dd/mm/yyyy
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Fiscal Year

6 April – 5 April

Fun Facts

The United Kingdom is made up of four countries: England, Scotland, Wales, and Northern Ireland.

The UK has a constitutional monarchy, with Queen Elizabeth II as the current reigning monarch.

London, the capital of the UK, is home to the iconic Big Ben and the Tower of London.

The UK is known for its rich history, with landmarks such as Stonehenge and Buckingham Palace.

Football (soccer) is a hugely popular sport in the UK, with passionate fans and historic clubs.

The Beatles, one of the most famous bands in history, originated from Liverpool, UK.

United-Kingdom

Contributions

Employee Payroll Tax

Contribution TypeRate
Pension ContributionWorkplace pension 5.00%
NIC letter0.00%
NIC letter12.00%
NIC letter2.00%

Employer Payroll Tax

Contribution TypeRate
Employers Pension ContributionWorkplace Pension-3.00%
a levy designed to boost essential training and development of apprenticeship programs.Apprenticeship Levy-0.5%
Earnings at or above lower earnings limit up to and including secondary threshold.0.00%
Earnings above primary threshold up to and including upper earnings limit12.00%
Earnings above secondary threshold up to and including Freeport upper secondary threshold13.80%
Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans13.80%
Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans.13.80%

Payroll

Payroll Cycle

The payroll cycles are Monthly.

13th Salary

In the United Kingdom, there are no statutory provisions for 13th-month salary payments.

Work Hours and Week

The standard working week in the UK is 40 hours, but workers can opt out of the 48-hour limit imposed over a 17-week period.

Overtime

All work above the standard working hours per week is to be paid as overtime and is regulated by employment contract/collective agreements etc.
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Leave

Paid Time Off

The annual leave entitlement is 20 working day of paid leave per year for full-time employees

Public Holidays

There are eight public holidays in the UK, known as bank holidays, which are recognized nationwide.

Sick Days

Employees can receive up to 28 weeks of paid sick leave

Maternity Leave

In the United Kingdom, female employees receive 52 weeks of statutory maternity leave and 26 weeks of ordinary leave, followed by 26 weeks of additional maternity leave.

Mothers are compensated by Statutory Maternity Pay (SMP) for up to 39 weeks at the rate of 90.00% of the employees average weekly earnings for the first six weeks, and 156.66 GBP or 90.00% of the employee’s average weekly earnings, whichever is lower) for the following 33 weeks.

Paternity Leave

Employees in the UK are entitled to one to two weeks of paid paternity leave, with statutory paternity pay of 172.48 GBP per week, or 90.00% of their average weekly earnings, whichever is lower, if they meet the eligibility criteria.

Parental Leave

Parents in the UK can take Shared Parental Leave (SPL) for up to 50 weeks, sharing 37 weeks of pay, following the birth or adoption of a child, with leave to be taken within the first year of the child’s arrival.

Termination

Termination Process

Termination procedures in the UK depend on the employment and collective agreements, with fairness determined by the reason and conduct of the dismissal.

Notice Period

Statutory notice periods for redundancy range from one week to 12 weeks, with dismissals for gross misconduct possible without notice, and employers having the option to provide payment in lieu of notice.

Severance Pay

Severance pay is only required in the case of redundancy. The amount of severance is dependent on the age of the employee, if they have served at least two years of service:

  • Half a week’s pay for each full year for employees under the age of 22
  • One week’s pay for each full year for employees between the ages of 22 to 41
  • One and half weeks’ pay for each full year for employees over the age of 41
  • Length of service is capped at 20 years
  • Weekly pay is capped at 571 GBP

Severance is not required in regular termination cases.

Probation Period

Probation Period

Probation periods in the UK are determined by the employment contract and typically range from three to six months with no statutory provisions.

Immigration

Employers in the UK must meet visa requirements and obtain a sponsor license to hire workers from outside the country; the end of the Brexit transition period in 2021 marked the end of free movement between the UK and EU.

The UK’s immigration system treats all applicants equally, and citizens of the EU, Switzerland, Norway, Iceland, and Liechtenstein can apply for the EU Settlement Scheme. Visitors from abroad can stay in the UK for up to 6 months without a visa for various purposes.

The UK offers various work visas for different durations, requiring specific information on skills, qualifications, job sponsorship, and potential family relocation.

For Work Permits

Tier 2 (General) Visa

Tier 2 (Intra-Company Transfer) Visa

Tier 5 (Temporary Worker) Visa

VAT

The standard rate of VAT in the United Kingdom is 20.00%