Managed Payroll Glossary
When choosing CIS as your payroll model, there are lots of abbreviations and terms to take note of. They can be confusing so we have collated a list of CIS terminology for you to refer to whenever you need it.
Gross Pay is the total amount of money earned by an employee or contractor before any deductions, such as taxes and National Insurance Contributions (NICs).
Mileage Allowance is reimbursement provided to employees or contractors for the cost of using their own vehicles for work-related travel.
Net Pay is the amount of money an employee or contractor receives after all deductions, including taxes and National Insurance, have been made from the gross pay.
National Insurance Contributions (NICs) are payments made by employees and employers to fund state benefits, such as the National Health Service (NHS) and the State Pension in the UK.
A P45 is a form provided by employers when an employee leaves a job. It includes details of earnings and tax paid during the employment, and is used to ensure correct tax deduction in any subsequent employment.
A P60 is a summary of an employee’s total earnings and deductions for a specific tax year. It is usually provided annually by employers at the end of the tax year.
Pay As You Earn (PAYE) is the system used by employers to deduct income tax and National Insurance contributions from employees’ salaries before paying them. This ensures that tax is collected at the source.
A Payroll Management Company is an organisation that acts as an employer for contractors and freelancers. It handles payroll processing, tax deductions, and other administrative tasks on behalf of the contractors.
Pension Auto-Enrolment is a legal requirement in the UK for employers to automatically enrol eligible employees into a workplace pension scheme. Both employers and employees contribute to the pension.
Self-Assessment is a system in the UK where individuals report their own income and pay taxes directly to HM Revenue & Customs (HMRC). It is used mainly by those with income outside, or in addition to, PAYE employment.
SSP (Statutory Sick Pay) is a payment made by employers to employees who are unable to work due to illness, following certain eligibility criteria, such as earning above a certain threshold or being sick for at least four consecutive days.
The Weeks in Assignment refers to the number of weeks a contractor has been working on a specific assignment. This term is often used to track the duration of a project or engagement.
