If you are confused by the “alphabet soup” that proliferates within the payroll system in the United Kingdom, than you should read this.

Below are some of the acronyms you will come across:

HMRC – Her Majesty’s Revenue and Customs (HMRC) is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support.

PAYE – (Pay As You Earn) is the system that HM Revenue & Customs (HMRC) use to collect Income Tax and National Insurance contributions (NICs) from employees’ pay as they earn it.

NIC – National Insurance Contributions (NIC) are paid by Employees and Employers to the HM Revenue & Customs (HMRC). NICs build up an individual’s entitlement to certain state benefits, including the State Pension and Employment and Support Allowance

SSP – Statutory Sick Pay (SSP) is paid to employees who are unable to work because of illness. The maximum amount of SSP payable – 28 weeks in one period of incapacity for work (PIW). As an employer, one is responsible for paying SSP to employees who meet certain qualifying conditions.

SMP – Statutory Maternity Pay (SMP) – Employees expecting a baby are entitled to 26 weeks ‘Ordinary Maternity Leave’ and 26 weeks ‘Additional Maternity Leave. ’ An employee’s entitlement to Statutory Maternity Pay depends on how long they have worked for the employer and how much they earn. The employer is initially responsible for payment. All employers are entitled to claim back 92% of SMP paid back from HM Revenue & Customs.

SPP – Statutory Paternity Pay (SPP) – An employee may be entitled to ordinary paternity leave and pay if they have responsibility for the baby’s upbringing, are taking time off to support the mother or care for the baby and are either the baby’s biological father or mother’s husband/partner. Employees are entitled up to 2 weeks paid at the current SPP (Statutory Paternity Pay).

SAP – Statutory Adoption Pay (SAP) – If they meet certain qualifying criteria, an employee is entitled to take 52 weeks’ statutory adoption leave and receive statutory adoption pay (SAP) for 39 weeks when they adopt a child. The rules are different depending on whether the child is adopted from within the UK or from overseas.

SRP – Statutory Redundancy Payment (SRP) – Employees have the right to a statutory redundancy payment if they are an employee who has worked continuously for the employer for at least two years and are being made redundant. Eligible employees would be entitled to receive a statutory redundancy payment (SRP). A SRP is based on an employee’s age and length of employment and is counted back from the date of dismissal.

BACS – Bacs Payment Schemes Limited (originally Bankers’ Automated Clearing Services) is a United Kingdom scheme for the electronic processing of financial transactions. BACS direct debits and BACS direct credits are made using the BACS system. BACS payments take three working days to clear: they are entered into the system on the first day, processed on the second day, and cleared on the third day.

Referenced Links:

http://www.businesslink.gov.uk/bdotg/action/layer?r.i=1073792636&r.l1=1073858787&r.l2=1084822773&r.l3=1074039090&r.t=RESOURCES&topicId=1083260537

http://www.jcpayroll.co.uk/useful-forms-and-factsheets/

http://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858787&r.l2=1080898061&r.s=tl&topicId=1080898275

http://www.direct.gov.uk/en/Employment/RedundancyAndLeavingYourJob/Redundancy/DG_10029836