This article answers the most common questions about payroll.
Please note that FreeAgent's payroll functionality won't be available if you have an unincorporated landlord account or if you're preparing your accounts using cash basis accounting.
Do I have to run payroll?
You don't need to set up payroll if you don’t have any employees and the company doesn’t pay you a salary. If the company has a PAYE scheme (e.g. because the company is reimbursing expenses) then you should be running payroll and filing RTI.
Can I use other payroll software with FreeAgent?
You might have previously used FreeAgent's payroll alongside another payroll system. You can continue to do this and create payslips in FreeAgent but not file them.
Can I only run payroll one month at a time?
You should run your payroll in FreeAgent once each month. It’s likely that you’ll need to make adjustments to your payroll throughout the year eg. employees leaving/new employees starting work or changes to items like overtime, commission or bonuses.
Why can't I see the button to file my payroll?
The button will appear on each pay period from the 1st of each month.
Do I need to tell HMRC it’s the final submission for the tax year?
HMRC requires you to put ‘Yes’ in the ‘Final submission for year’ field (if available) in your payroll software. FreeAgent does this automatically for you when you file month 12.
How do I close my payroll scheme?
If you wish to submit an Employer Payment Summary (EPS) or Full Payment Submission (FPS) in order to close your payroll scheme, you should do this directly through HMRC's Basic PAYE Tools. You can still use FreeAgent to submit your FPS - the submission that tells HMRC how much you've paid your staff - but you will also need to make an EPS or FPS submission using Basic PAYE Tools to tell HMRC.
New or existing employee?
When first setting up your payroll in FreeAgent at the start of the tax year (eg. starting 6th April 2021) add any existing members of staff as ‘existing employees’ when creating their payroll profiles.
If an employee joins the company sometime during the tax year, then add them as a ‘new employee’.
How do I mark an employee as having left the company?
If an employee leaves the company and you need to remove them from the payroll, you simply need to edit their payroll profile and add a leaving date. Once this leaving date is sent to HMRC this user cannot be paid again, so please don't enter the leaving date in the profile until either you have paid your employee for the last time or you intend to do so in the current pay period. Remember to pro rata the final payslip if required.
FreeAgent will include the leaving details in your next RTI submission to HMRC.
If a former employee returns to my business, how do I add them back to the payroll?
If the employee returns in the same tax year as they left your business, you should add them as as a new user, then create a new payroll profile for them. You shouldn't use their existing payroll profile. If the employee returns in a future tax year, however, you should use their existing user and payroll profiles.
What is RTI?
RTI stands for Real Time Information and it's the way to report wages, salaries, PAYE and National Insurance to HMRC. It requires data to be submitted to HMRC online whenever employees are paid.
How does RTI work in FreeAgent?
FreeAgent will submit your RTI for you as part of your payroll. You'll need to enter your Government Gateway ID details when prompted after running each monthly payroll.
What gets sent to HMRC in my RTI submission?
For an RTI submission to HMRC, FreeAgent will send information you've entered into each individual payroll profile, payslip information (including Tax and NI calculations) and also some of your company information.
Can my accountant run payroll and submit RTI?
If your accountant is a user of your FreeAgent account (with the user type 'Accountant') they can run your monthly payroll and make RTI submissions using their HMRC agent login details.