A Complete Guide to Essential UK Payroll Acronyms
Navigating the world of UK payroll processing can be complex, especially when dealing with the wide variety of acronyms commonly used in official documents, communications, payslips, and forms. Understanding these acronyms is essential for managing your payroll efficiently and ensuring compliance with legal requirements.
To help you manage payroll and tax-related tasks smoothly, here's a full breakdown of some of the most frequently used acronyms in the UK.
2FA - 2 Factor Authentication
2FA (Two Factor Authentication) is a security process that enhances data protection. By requiring two forms of identification, 2FA is frequently used to access sensitive systems, including payroll platforms.
AEO - Attachment of Earnings Order
An Attachment of Earnings Order (AEO) is a legal procedure through which deductions are made directly from an employee's salary to pay off a debt. This typically occurs in situations where the employee has failed to meet financial obligations, such as unpaid child maintenance, council tax, or other legal debts.
*Please be advised that AEOs are subject to protected earnings parameters, which limit the deductions that can be made from an employee's salary. For detailed information, please refer to the official guidance: Make debt deductions from an employee's pay: Getting an order - GOV.UK
CCV - Child Care Vouchers
Child Care Vouchers are a tax-efficient benefit offered by employers to help working parents with the cost of childcare. The system allows employees to exchange part of their salary for vouchers, which can be used to pay for registered childcare services.
CSA - Child Support Agency
The Child Support Agency (CSA) is a UK government body responsible for ensuring non-residential parents contribute to the financial support of their children. They manage child support payments and can issue Deduction from Earnings Orders (DEOs) to collect maintenance directly from an employee's salary.
CTAEO - Council Tax Attachment of Earnings Order
A Council Tax Attachment of Earnings Order (CTAEO) is a specific type of AEO where deductions are made from an employee's salary to settle unpaid council tax. Local authorities may issue this order to recover outstanding council tax arrears.
DEO - Deduction from Earnings Order (Raised by CSA for Child Maintenance)
A Deduction from Earnings Order (DEO) is an arrangement where an employer is instructed to deduct amounts from an employee's salary to pay for child maintenance. These orders are commonly issued by the Child Support Agency (CSA) to ensure timely payment of child support.
DWP - Department for Work and Pensions
The Department for Work and Pensions (DWP) is a UK government department responsible for welfare and pension policies. It plays a significant role in administering various social security benefits, including unemployment, disability, and state pensions. The DWP can issue notices related to benefits, including deductions from earnings for overpayments or other debts.
PAYE - Pay As You Earn
PAYE (Pay As You Earn) is the system through which employers deduct income tax and National Insurance contributions from employees' wages before they are paid. These deductions are paid directly to HM Revenue and Customs (HMRC). PAYE simplifies tax payments by ensuring that employees' tax obligations are met automatically, preventing the need for individuals to manage their own tax payments directly. This system is commonly used for regular salaries and wages in the UK.
PBIK - Payrolling Benefits in Kind
PBIK (Payrolling Benefits in Kind) refers to the process of taxing benefits and expenses provided to employees through payroll, simplifying the reporting process. Instead of submitting a P11D form at the end of the tax year, employers can register for the online service and report benefits directly through payroll. This system eliminates the need for P11D submissions for payrolled benefits and allows for more streamlined tax collection, ensuring benefits are taxed as part of the employee's regular pay. For full details, you can check out the official HMRC guide .
PILON - Pay In Lieu Of Notice
Pay In Lieu Of Notice (PILON) refers to a payment made to an employee when they are released from their contract without having to work their notice period. This payment compensates for the salary the employee would have earned had they worked through the notice period.
PSA - PAYE Settlement Agreement
A PAYE Settlement Agreement (PSA) is an arrangement that allows employers to settle certain types of tax liabilities on behalf of their employees. This often covers benefits or expenses provided to employees that are subject to tax but are not normally processed through payroll.
SSO - Single Sign On
Single Sign-On (SSO) is a user authentication process that allows an employee to access multiple related systems with a single login. This is particularly useful for businesses with complex payroll or HR platforms, simplifying the process of accessing and managing data securely.
TPP - Third Party Payments
Third Party Payments (TPP) refer to any payments made to third parties on behalf of an employee. This could include payments made to a creditor, such as a loan company, or to a government department for taxes, child support, or other obligations.
YTD - Year to Date
Year To Date (YTD) refers to the accumulated value of an employee's earnings or tax contributions from the beginning of the current tax year up to the present date. YTD figures are often used to assess overall pay, tax deductions, and other financial metrics throughout the year.
Understanding these acronyms is vital for professionals working in payroll processing, HR, and taxation within the UK. They not only help streamline communication but also ensure that the correct procedures are followed when dealing with various payroll circumstances. Whether you are a payroll specialist, business owner, or employee, keeping track of these terms will help you stay informed and compliant in the fast-paced world of taxation and customs.
By getting comfortable with these acronyms, you will improve your workflow and boost efficiency in managing payroll and employee-related financial processes. If you have any questions regarding the contents of this article, feel free to connect with us for further guidance.
Written by
Isabella Zermani
Pay Check
paycheck@paycheck.co.uk
+44 (0) 20 7866 4600