Guest Blog from Linda West of Clear Accounting

In my Accountancy role I see many small businesses feel that the minute they become employers and have registered with HMRC that they have to go and invest in expensive payroll software, technical support and training in the software.

However, there is an easier, simpler and much cheaper way for those just finding their feet as employers. HMRC for a few years now have supplied a CD Rom that calculated tax and NI – many people filed it away feeling it was inferior to the more expensive all singing all dancing packages.  Yet, for many people it could do exactly what they needed it to do!

HMRC have now moved on from the CD Rom to a free download which is available from the Business Link Government website.

HMRC Software Advantages

Once downloaded the software is easy to use – you just add your employer’s details and individual employee details.  As long as you are registered with the Government Gateway the software will not only produce the p45 or p46 for starters, but can be transmitted straight to HMRC.

The added benefit of using the free software is that if you have a problem you can ring the HMRC ‘new employers helpline’ and they will help you out, avoiding the need to sign up to sometimes very expensive technical support contracts. You also know that the data is always up to date as it gives prompts to tell you when to download updates.

HMRC Software Disadvantages

The one main downside of the free HMRC software is that you have to prepare your own wage slips. I have been told by a HMRC software trainer that this is only to stop the likes of third party software firms from suing them for providing free software! This isn’t really a problem as templates can be made on excel (see below) or pre-printed wage slip booklets can be purchased from most large stationers.

If you want a template of an excel wage slip, then please visit me on Facebook – click ‘like’ and leave me a message on my wall and I will send you a template you can use .. for FREE!

Another partial downside is that the HMRC software doesn’t automatically calculate SMP, SPP, SAP and student loan deductions; however, it does include simple calculators for all of these so they can be accurately calculated. I don’t necessarily think that this is a bad idea in itself, as I see quite a lot of businesses rely on automatic calculations, but when something incorrect arises they are unable to say why and all they can say is ‘that was the figure the system gave me’! By following the simple calculators you do get a grasp of how the figures are calculated and it is much easier to resolve problems as a result!

Word of Warning

The Free downloadable software isn’t for everyone. If you have more than 20 employees, then third party software packages are likely to be more effective for you.  If you do use third party software always look for the ones that have the HM Revenue & Customs Payroll Standard on them. If unsure always ask!

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If you need any advice regarding payroll, or want to outsource your payroll administration, then please do not hesitate to contact me.  You can contact me through Facebook Twitter or LinkedIn, or you can email me directly at or alternatively call me on my mobile 07950 349150.


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