UK payroll jargon, translated

Updated October 2026 · Bookmark-worthy

UK payroll has a dialect all of its own, and if you're an overseas employer it can feel like a second language on top of a second language. Here's every term you'll actually meet, in plain English, plus the dates that matter.

The abbreviations, A to Z

Term	Stands for	In plain English
AE	Auto-Enrolment	The legal duty to enrol eligible staff into a workplace pension (minimum 3% employer / 8% total on qualifying earnings).
BACS	Originally Bankers' Automated Clearing Services; now just the name Bacs	The standard UK bank-transfer system used to pay wages and HMRC.
BIK	Benefit in Kind	Non-cash perks (company car, private health cover) that may be taxable.
DCNI	Direct Collection, National Insurance only	A direct payment scheme in the employee's name that collects only the employee's own National Insurance, quarterly; Income Tax goes through Self Assessment. HMRC apply it only in specific cases, and may suggest a different scheme once they have the full facts.
DPNI	Direct Payment (tax + NI)	A direct payment scheme in the employee's name, collecting Income Tax and the employee's National Insurance, used where an overseas employer with no UK presence owes no UK employer's National Insurance. Full guide · we set these up.
NI-only scheme	National Insurance only, employee's and employer's	A scheme in the employer's name for an overseas employer that owes UK employer's National Insurance, which is usual in the EU, the EEA and Switzerland. The employee's Income Tax goes through Self Assessment or a tax-only scheme.
EE / ER	Employee / Employer	Shorthand you'll see on payslips and pension statements, e.g. "ER pension" is the employer's contribution.
EOR	Employer of Record	A third party that legally employs staff on your behalf, for a premium fee. One of the three routes to UK payroll.
EPS	Employer Payment Summary	The RTI submission used for adjustments, reclaiming statutory pay, or telling HMRC nobody was paid.
FPS	Full Payment Submission	The RTI report sent to HMRC on or before every payday, showing who was paid what. RTI explained.
HMRC	His Majesty's Revenue & Customs	The UK tax authority, the body your payroll reports and pays to.
NI / NIC	National Insurance (Contributions)	A tax on earnings paid by both employee and employer. The employer's share, 15% above £5,000 a year (2026/27), is usually the main hidden cost of a UK hire. Whether it's due depends on who the employer is: an overseas employer with no UK presence on a DPNI usually owes none. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Employer NI explained.
NINO	National Insurance Number	A worker's unique NI reference. Get it if you can, but you can pay someone without one: leave the field blank on the FPS and never use a made-up number.
PAYE	Pay As You Earn	The UK system for deducting Income Tax and NI from wages at source, every payday.
PEPM	Per Employee Per Month	A common payroll pricing model. We price per scheme or per payslip instead, as published on the pricing table.
P11D	n/a	The form reporting employees' benefits in kind to HMRC, due 6 July.
P32	n/a	The employer's monthly summary of PAYE/NI owed to HMRC.
P45	n/a	The leaver's document showing pay and tax to date, given when someone leaves a job.
P60	n/a	The year-end summary of pay and deductions each employee must receive by 31 May.
RTI	Real Time Information	In payroll, RTI means telling HMRC about pay each time you pay someone, not once a year. Employers report tax, National Insurance and other deductions when or before the payments are made, instead of waiting until after the end of the tax year. Your payroll software does it with two reports. The Full Payment Submission (FPS) tells HMRC what you paid your employees and what you deducted, and goes on or before every payday, for everyone you pay. The Employer Payment Summary (EPS) claims any reduction on what you owe HMRC, for example statutory pay, by the 19th of the next tax month, and is sent instead of an FPS in a tax month when you paid nobody. You then pay HMRC the balance by the 22nd (or the 19th if paying by post). RTI, the FPS and the EPS explained.
SMP / SPP / SSP	Statutory Maternity / Paternity / Sick Pay	Legal minimum payments run through payroll when staff are off for these reasons.
TPR	The Pensions Regulator	The body that polices auto-enrolment compliance.
UTR	Unique Taxpayer Reference	A 10-digit tax reference for a business or individual, needed for Self Assessment.
YTD	Year To Date	Cumulative pay/tax figures within the current tax year.

Terms that confuse everyone

Tax year, runs 6 April to 5 April, not the calendar year. Payroll resets each 6 April.
Tax month, runs from the 6th of one month to the 5th of the next (this is why HMRC payment deadlines look odd).
Tax code, tells payroll how much tax-free pay an employee gets (e.g. 1257L). Wrong codes are the #1 cause of "my tax looks wrong" queries.
Gross vs net pay, gross is before deductions; net is what lands in the employee's bank.
Qualifying earnings, the slice of pay used to calculate auto-enrolment pension contributions.
Employer's NI, not deducted from the employee: an extra cost on top of gross salary. Calculate the true cost of a hire.

The dates that matter

When	What
On or before payday	FPS due to HMRC (every single payday)
22nd of the month	PAYE/NI for the previous tax month due to HMRC (electronic; 19th by post)
6 April	New tax year, new rates and thresholds apply
31 May	P60s must be given to all employees
6 July	P11D / benefits returns due
31 January	Self Assessment online filing & payment deadline
From your duties start date	Eligible staff put into a workplace pension (write to staff within 6 weeks, backdating any missed contributions if the scheme isn't set up by then; declaration of compliance to TPR within 5 months)

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Definitions are simplified for clarity and reflect our understanding as at June 2026. Rates and thresholds change, always confirm current figures on GOV.UK or ask us.