9. Making payments

How is the money transferred from the businesses' bank account to the employees' bank account?

Electronic Funds Transfer (EFT) is used to transfer the money from the business bank account into the employees’ bank account. The system that banks use is called BACS (originally stood for 'Bankers Automated Clearing Services' but now it is just called BACS payments).

The same method is also used to transfer the tax and NI payments from the business bank account to the Government bank accounts.

Note, although the employee is really paying the tax and the NI, the business deducts the amount due from the employees’ salary and keeps it in the business bank account. The business then pays that money directly to the Government on the employees’ behalf.

So in summary, wages and salaries are now largely computerised using Electronic Funds Transfer. This has benefits to the employer, employee and the Government.