In the construction industry, managing payroll can be particularly challenging due to the diversity of employment types, fluctuating work hours, and the complexity of tax regulations. For UK construction companies, selecting the right payroll solution is crucial to streamline operations, ensure compliance with HMRC regulations, and enhance overall efficiency. This guide explores the best construction payroll software and services, tailored to the unique needs of the construction sector.
Understanding construction payroll requirements
Before delving into software and services, it’s essential to comprehend the specific payroll requirements of the construction industry:
- CIS Compliance: The Construction Industry Scheme (CIS) is a tax deduction scheme which involves contractors deducting money from a subcontractor’s payments and passing it to HMRC. Compliance with CIS is paramount.
- Mobility and Accessibility: Construction work often involves multiple sites, requiring payroll solutions that are accessible and mobile-friendly.
- Flexibility in Payroll Processing: With variable working hours, overtime, and different contract types, construction companies need flexible payroll processing.
- Integration with Other Systems: Integrating payroll with other business systems like HR and accounting software helps streamline operations.
How much does construction payroll cost?
When it comes to selecting a payroll solution for a construction company, understanding the associated costs and fees is crucial for budgeting and financial planning. Payroll solutions and services vary widely in terms of pricing structures, often depending on the complexity of your payroll needs, the number of employees, and the level of service required.
Here’s an overview of the types of costs and fees construction companies should expect when implementing a payroll solution.
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Subscription fees for software
Most payroll software providers operate on a subscription model, charging a monthly or annual fee. This fee typically varies based on the number of employees and the range of features required. Basic plans might start from as little as £10 per month for a small number of employees but can increase significantly for additional features such as CIS compliance, advanced reporting, and integration capabilities. It’s also common for providers to offer different tiers of service, allowing companies to scale their solution as they grow.
Implementation and setup fees
Some payroll solutions, especially those requiring customisation or integration with existing systems, may charge an initial setup or implementation fee. These fees cover the cost of configuring the software to meet the specific needs of your business, training your staff on how to use the system, and ensuring that everything is up and running smoothly. Implementation fees can range from a few hundred to several thousand pounds, depending on the complexity of the setup.
Additional feature costs
Beyond the basic payroll processing capabilities, you may opt for additional features that incur extra costs. These can include advanced reporting tools, real-time data access, mobile app functionality, and integration with other software such as accounting or HR systems. Providers might offer these features as part of higher-tier plans or as add-ons to your current plan, with prices varying accordingly.
Outsourced payroll service fees
For companies opting for fully managed payroll services, fees are typically structured as a per-employee cost per pay period, which can range from £5 to £15 per employee, depending on the level of service required. These services often include comprehensive support for CIS compliance, tax filings, and handling employee queries, providing significant value for construction companies looking to outsource these complex tasks.
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Hidden costs and penalties
It’s essential to be aware of any potential hidden costs or penalties that could arise. These might include fees for additional training, support calls, or late amendments to payroll. Additionally, inaccuracies in payroll processing can lead to penalties from HMRC, making it crucial to select a reliable payroll solution or service provider.
Budgeting for your construction payroll solution
When budgeting for a payroll solution, consider not only the initial and ongoing costs but also the potential savings in time and resources, improved compliance and accuracy, and the scalability of the solution as your company grows.
It’s also advisable to review and compare several providers, considering both their pricing structures and the value they offer, to find the best fit for your construction company’s specific needs.
Top payroll software for construction companies
1. Xero with CIS functionality
Xero, renowned for its user-friendly accounting software, offers comprehensive payroll features with CIS functionality. It simplifies CIS processes, automatically calculating and deducting CIS tax. Additionally, Xero’s cloud-based system ensures payroll access from any location, which is ideal for on-site management.
2. QuickBooks Online Payroll
QuickBooks provides an all-in-one payroll solution that integrates seamlessly with its accounting software. Its CIS features automate tax deductions for subcontractors, ensuring compliance. Moreover, QuickBooks offers mobile apps that facilitate payroll management on the go.
3. Sage Payroll with CIS
Sage Payroll is tailored for the UK market, offering robust CIS support and compliance. It allows for detailed record-keeping and easy submission of CIS returns to HMRC. Sage’s solutions cater to both small and large construction firms, offering scalability and integration options.
4. BrightPay
BrightPay stands out for its user-friendly interface and comprehensive payroll processing features. It supports CIS deductions and provides tools for managing employee leaves, pensions, and more. Its flexibility makes it suitable for construction companies of all sizes.
Choosing the right construction payroll service
While managing payroll in-house is a viable option for some construction companies, others may prefer to outsource this complex task to ensure compliance and efficiency.
Payroll services that specialise in the construction sector not only handle the intricacies of payroll processing but also ensure adherence to the Construction Industry Scheme (CIS) and other regulatory requirements.
Below are some of the top construction payroll services providers in the UK, known for their expertise and comprehensive service offerings.
1. Hudson Contract Services
Hudson Contract Services is a leading provider of payroll services specifically tailored for the construction industry. They offer a range of services from CIS compliance and payroll processing to bespoke contract management solutions. Hudson’s expertise in the construction sector ensures that companies remain compliant with ever-changing legislation, allowing them to focus on their core business operations.
2. Caroola
Caroola (formerly named Nixon Williams) is well-regarded for offering specialised accounting and payroll services for contractors and freelancers, including those in the construction industry. Their service package includes handling CIS deductions, submitting monthly returns to HMRC, and offering tailored advice on tax efficiency and compliance. Caroola is particularly favoured for its personalised approach and dedicated account managers.
3. PayPlus
PayPlus provides payroll services to a wide range of industries, including construction. They offer a bespoke payroll solution that caters to the unique requirements of construction companies, including CIS compliance, automated tax deductions, and real-time information (RTI) submissions to HMRC. PayPlus is praised for its efficient service and the ability to adapt to the specific needs of its clients.
4. Mosaic Payroll Solutions
Mosaic Payroll Solutions specialises in providing comprehensive payroll services, including full CIS compliance, for construction companies. Their services encompass everything from payroll processing and HMRC submissions to dealing with employee queries. Mosaic stands out for its commitment to simplifying payroll for construction businesses, offering cloud-based solutions for easy access and management.
5. The Payroll Site
The Payroll Site offers a flexible online payroll service that accommodates the specific needs of the construction industry, including CIS support. It allows construction companies to maintain control over their payroll while benefiting from the convenience of an outsourced service. The Payroll Site is ideal for companies looking for a scalable, user-friendly solution that integrates seamlessly with existing business systems.
Choosing the right construction payroll service provider
When selecting a payroll service provider for your construction company, it’s crucial to consider factors such as the provider’s experience with CIS and the construction industry, the comprehensiveness of their service offering, and their ability to offer scalable solutions that grow with your business.
Conclusion
Choosing the right payroll solution or service is crucial for construction companies in the UK. The best choice depends on the company’s size, the complexity of its payroll needs, and its preference for in-house or outsourced payroll management.
By selecting a software or service that meets these unique industry requirements, construction companies can ensure efficient payroll processing, compliance with HMRC regulations, and more time to focus on core business activities.
FAQ – Construction payroll solutions
Construction payroll refers to the process of managing compensation for employees and subcontractors in the construction industry, which includes adhering to specific regulations like the Construction Industry Scheme (CIS) and handling variable work hours and job sites.
Construction payroll differs due to the need for CIS compliance, handling of subcontractor payments, variable work hours and locations, and often more complex tax and reporting requirements compared to regular payroll.
Key features include CIS compliance, mobile access for on-site management, integration with accounting and HR systems, flexible payment scheduling, and support for multiple job sites.
CIS compliance is crucial because it ensures that contractors deduct money from subcontractor payments for tax purposes correctly, as mandated by HMRC, helping avoid penalties and ensuring legal compliance.
Yes, most construction payroll software is designed to handle payments to both employees and subcontractors, including managing CIS deductions for subcontractors.
By using construction payroll software that specifically supports CIS compliance, regularly updating CIS status of subcontractors, and ensuring accurate and timely reporting to HMRC.
Penalties can include fines from HMRC for late or incorrect submissions, over- or underpayment of taxes, and potential legal repercussions for non-compliance.
Construction payroll software can integrate with accounting, HR, and project management systems to streamline workflows, share data seamlessly, and improve overall efficiency.
Costs vary widely based on the number of employees, features needed, and whether the solution is hosted on-premise or cloud-based, but monthly subscriptions can range from £10 to over £100.
Yes, there are payroll services that specialise in the construction industry, offering expertise in CIS compliance, handling variable work schedules, and managing payments to subcontractors.
Outsourcing payroll can save time, reduce the risk of errors and non-compliance, provide access to payroll experts, and allow construction companies to focus more on their core business activities.
Yes, many construction payroll solutions are designed to manage both union and non-union workers, including handling different pay rates, deductions, and benefits as per union agreements.
Mobile features allow on-site managers and workers to access payroll information, submit hours, and manage tasks from anywhere, improving accuracy and reducing delays in payroll processing.
They should evaluate their needs, select a software that meets these requirements, ensure the new solution supports data migration, train staff on the new system, and plan a transition period to minimise disruptions.
It’s advisable to review payroll processes and software annually or whenever there are significant changes in legislation, company size, or business operations to ensure ongoing compliance and efficiency.