Welcome to the MYCO Works Blog

Managing payroll is an essential task that can quickly become complex, particularly for small businesses. Ensuring employees are paid correctly, staying compliant with tax regulations, and maintaining accurate records can soon feel overwhelming.

The good news is that with the right approach, and the right tools, payroll can become far more manageable. In this guide, we outline the key steps small business owners can take to simplify the process, improve efficiency, and save valuable time.

1. Understand Your Payroll Responsibilities

When you employ staff, there are several key obligations you need to meet:

• Register as an employer before running your first payroll.
• Submit payroll information to the authorities on or before each payday.
• Collect employee details, including tax codes and national insurance numbers.
• Provide payslips for every pay period, clearly outlining earnings and deductions.
• Calculate gross and net pay, accounting for tax, National Insurance, pensions, and other deductions.

Even if you only employ one person, these requirements still apply — so it’s important to have a reliable system in place from the start.

2. Decide How Payroll Will Be Managed

There are several ways to manage payroll, including:

• Manual processing – Using spreadsheets to calculate pay. This may work for very small teams but is often time-consuming and prone to errors.

• Outsourcing – Handing payroll over to an accountant or payroll bureau. While this removes the administrative burden, it typically involves higher costs.

• Payroll software – Cloud-based solutions that automate calculations, generate payslips, and submit reports directly to HMRC.

3. Establish a Payroll Schedule

Decide how often employees will be paid: weekly, fortnightly, or monthly. Once the schedule is established, communicate it clearly to your team and make sure it is followed consistently. A reliable payroll routine builds trust and helps employees manage their finances with confidence.

4. Maintain Accurate Records

Employers must keep payroll records for several years, including payslips, deduction details, and all required submissions. Accurate record-keeping not only ensures compliance but also simplifies tax preparation and provides essential protection in the event of an audit.

Adopting a cloud-based system makes this process more efficient by securely storing records online. This reduces reliance on paper files and ensures that documents are easy to access whenever needed.

5. Prepare for Future Growth

Payroll needs naturally become more complex as a business grows. Even if you start with just one or two employees, over time you may need to handle additional staff, pensions, and employee benefits.

By putting an efficient system in place early, payroll can scale seamlessly alongside your business, saving time and reducing the risk of errors as your team expands.

Looking for Accounting Software That Makes Things Easy?

Xero is a leading cloud-based accounting solution designed to help small businesses manage their finances with ease. With a wide range of features, it simplifies day-to-day financial management and ensures payroll runs smoothly.

With Xero you can:

• Send invoices instantly from desktop or mobile.
• Track and manage employee spending with ease.
• Automatically calculate and file VAT securely with HMRC.
• Pay yourself and your team with HMRC-approved online payroll.
• Reconcile transactions quickly, matching bank feeds to your accounts with ease.

Try Xero today and receive 100% off for six months  — making it easier than ever to simplify your accounting and payroll.

Final Thoughts

Payroll doesn’t have to be complicated. By understanding your obligations, choosing the right method, and embracing technology, you can ensure staff are paid correctly and on time while staying fully compliant.

With tools like Xero, payroll and accounting become more efficient, giving you the confidence to focus on what matters most.

Article by GoSimpleTax

A government proposal to increase the Self Assessment tax return threshold for traders from £1,000 to £3,000 before the end of this parliament (2029) would mean 300,000 people (98% of them self-employed) no longer having to file a tax return.  

An estimated 90,000 would also have no tax to pay and many side-hustlers will be among them. It’s great news for those who operate a side hustle, whether selling on Vinted or eBay, running a dropshipping business, selling handmade items, Uber driving, dog walking, teaching or other part-time business.

Side hustle growth

Currently, if your annual gross trading income (ie total amount you earned by trading without deducting any expenses) is more than £1,000, you must register for Self Assessment (if you’re not already registered) and file a Self Assessment tax return each year. But this could end for almost a third of a million people.

The government says it wants to make the change to free up time for taxpayers, so they can get on with running and growing their business, as it seeks to “transform HMRC into a quicker, fairer and more modern body”. However, that doesn’t mean that they won’t have to pay any tax. About 210,000 would, but they would do so via a new simple online service, although no details have yet been revealed.

According to James Murray, Ealing North MP and Exchequer Secretary to the Treasury: “We are changing the way HMRC works, to make it easier for Brits to make the very most of their entrepreneurial spirit. Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side hustle.”

Reality check

So, although the proposal is to increase the tax reporting threshold to £3,000, the £1,000 tax-free trading allowance won’t change. That means:

• If your gross annual trading income is below £1,000 – no tax is payable and you don’t need to report it to HMRC. You also get your Personal Allowance (currently £12,570 for the 2025/26 tax year), so you only pay Income Tax on gross income of £13,570. This won’t change.

• If your gross annual trading income is £1,000-£3,000, once the changes are introduced, Income Tax may still be payable, but you can report your income using the new simplified online service, without having to complete a tax return.

• If your gross annual trading income is more than £3,000, following the planned changes, you’ll still have to register for Self Assessment, complete a tax return and pay any taxes due.

Need to know! Current reporting rules remain the same and will only change if the proposals are introduced.

Welcome change?

Eve Williams, CEO of eBay UK, reacted favourably to the proposed change to the Self Assessment tax return threshold, saying: “This will be welcome news for thousands of UK sellers for whom eBay is a side hustle and a means of supplementing their household income during challenging times. By removing the paperwork associated with selling online, hopefully, we will help these side hustles grow into fully fledged small businesses.”

Reaction was rather more lukewarm from self-employment association IPSE. It said: “If the new service allows simple incomes to be reported in a few clicks, this will undoubtedly make the process of reporting easier for the estimated 210,000 that are expected to be eligible. But decoupling the thresholds for reporting and paying tax on small incomes has the potential to create confusion. Moreover, it’s a missed opportunity to lift both thresholds together, as organisations like IPSE have campaigned for, which would give side-hustlers an even bigger boost.”

Improving customer service

The government is also looking into ways to improve HMRC’s customer service. Murray and senior HMRC officials have had meetings with NatWest, Octopus Energy, Barclays, John Lewis, Centrica and other large firms to “learn best practice and innovative approaches to modernising and digitising customer service”. Use of generative AI and test and learn approaches to improving customer service are part of this. Reportedly,

HMRC is also trialling the use of AI to point taxpayers to tax information they need on government website GOV.UK. HMRC has also started to trial a new system that enables taxpayers to use their voice as their password, allowing them to “pass security checks faster and more securely”. The system could soon be rolled out if the trial proves successful, says the government.

About GoSimpleTax

Income, Expenses and tax submission all in one.

GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

The software submits directly to HMRC and is the solution for freelancers, the self-employed, sole traders and anyone with income outside of PAYE to file their self-assessment giving hints and tips on savings along the way.

Get started with GoSimpleTax today, it’s free to try.

Article by PolicyBee

Find out everything you need to know about your legal duty to protect your staff with this at-a-glance employers’ liability insurance guide.

What is employers’ liability insurance?

Employers’ liability insurance (EL) protects you against claims made by your employees for injuries and illnesses they suffer at work. It pays any compensation you’re liable for and your legal defence costs, too.

It’s especially important because it’s the only business insurance required by law. It’s also our third most-requested type of cover after professional indemnity insurance and public liability.

Who needs employers’ liability insurance?

It’s safe to say most UK businesses probably need EL. That’s because the policy wording uses such a broad definition of what constitutes an ‘employee’.

To make sure as many people as possible are covered, ‘employee’ is taken to have a much wider meaning than just a permanent member of staff employed under contract. They don’t even have to be paid.

Part-timers, volunteers, work experience kids, secondees, temps, helpers, apprentices, staff borrowed by you and labour-only subcontractors under your supervision are all classed as ’employees’. So don’t fall into the easy trap of thinking that because they’re not really ‘your’ staff, they’re also not your responsibility. They are – and so is their welfare.

In fact, apart from publicly funded organisations, the only businesses that don’t need employers’ liability insurance are:

• Companies where the owner is the sole employee, owning 50% or more of the issued share capital.
• Family businesses not incorporated as limited companies where all employees are closely related to the business owner (for example father, son, brother, sister, husband, wife etc).

How much employers’ liability cover do I need?

By law, £5m is the minimum amount required for most businesses. However, you’ll find most insurers offer £10m as standard, which at least makes choosing your level of cover straightforward.

That figure reflects just how costly claims for staff injury and illness can be. Even a claim for back problems sustained by sitting for long periods in an unergonomic office chair can run to the £thousands. And serious accidents and injuries inevitably demand much more.

What happens if I don’t have it?

The Health and Safety Executive (HSE) enforces the law on employers’ liability. If a health and safety officer comes knocking, you could be fined £2,500 for every day you should’ve had cover but didn’t, and £1,000 for not displaying your insurance certificate. Gulp.

In fairness, it’s likely you’ll be given a few days’ grace to sort out a policy rather than fined there and then. But it’s best not to chance it.

Anything else I need to know?

When you get your policy documents from your insurer or broker, stick your employers’ liability certificate in an obvious spot on a suitable wall – somewhere everyone can see it. That’s because you’re legally obliged to have it in a place others can easily read it.

And if you don’t have a wall, you can store your certificate electronically. Just make sure your guys know how to access it if they want to.

Not sure if any of this applies to you?

If you want EL advice straight from the horse’s mouth, the HSE have put together a handy employers’ liability insurance guide. It’s everything you need to know about employers’ liability in one document.

If that doesn’t cover it, there’s more info on our employers’ liability page, or feel free to give us a call on 0345 222 5391. We’re happy to talk you through it.

Need small business insurance that fits your needs? PolicyBee offers the cover you’re looking for — get a quote today.