BrightPay does not have a dedicated shadow payroll feature, but you can run a shadow payroll by setting up a separate employer profile within BrightPay and processing payroll for the relevant employees under this profile. Here’s how you can do this:
What is a Shadow Payroll?
A shadow payroll is typically used when an employee is working in another country but remains on their home country’s payroll for tax or compliance reasons. The shadow payroll is used to report and pay the appropriate taxes in the host country, without actually paying the employee from that payroll.
How to Run a Shadow Payroll in BrightPay
1. Set Up a Separate Employer (PAYE) Profile
- Go to the Main Employer dashboard and click on New Employer
- Enter the details for the shadow payroll entity (this may be a duplicate of your main employer, but with a different name or reference for clarity).
- If required, set up a separate PAYE reference for the shadow payroll.
- If in any doubt about the correct treatment - please seek guidance from HMRC directly.
2. Add Relevant Employees
- Add the employees who need to be included in the shadow payroll to this new employer profile.
- You can manually enter their details or import them if you have a CSV or FPS file from another system.
3. Process Payroll as Normal
- Enter the pay and deductions as required for the shadow payroll. This may include notional pay, tax, and National Insurance contributions, depending on your compliance requirements.
- You can use the **Additions and Deductions** section to enter any shadow payroll-specific items.
4. RTI Submissions
- If you need to submit RTI (Real Time Information) to HMRC for the shadow payroll, ensure you do so from the correct employer profile in BrightPay.
5. Reporting
- Use BrightPay’s reporting features to generate or create the necessary reports for your shadow payroll records.
Additional Notes
Shadow payrolls are complex and often require coordination with tax advisors to ensure compliance in both the home and host countries.
You should ensure that the shadow payroll does not result in double payment or double taxation for the employee.
For more information on running payroll in the UK and compliance, please check with HMRC.
BrightPay does not support or have the facility to apply tax equalisation for an employee’s payroll calculation.
BrightPay does not directly support S690/GME, which allows employers to deduct tax only on the portion of a globally mobile employee's income earned in the UK. There is no field in the software to enable this type of salary split.
However, if you need to process a portion of an employee's pay as not subject to PAYE tax - you could add another pay element under 'Pay and Benefits' or as an addition type and untick the 'PAYE can be deducted'.
Important: It is highly recommended that you contact HMRC before processing any pay, for any reason, before withholding the tax element. BrightPay cannot advise on the best practice as the software does not directly support foreign worker situations - always seek advice from HMRC to ensure you are fully compliant with the latest rules and regulations.
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