When should an Employer Register for PAYE
An employee is anyone who works on a full time, part time
or casual basis for the business and includes company
directors. Employers should register as soon as possible
when a qualifying employee is appointed and may register up
to four weeks prior to the first employees pay day. You
should register as an employer and operate a PAYE system if
your employee already has other employment, or if the
employee's earnings are equal to or above the PAYE
threshold. The PAYE threshold for 2007-08 is earnings of
£100 per week or £435 per month at which point income tax
and national insurance deductions may be required. These
limits include the value of any benefits in kind that may
be paid.
Employer Registration Information Required
Generally the information to be provided includes the
business name, trading address, type of business, name and
address of the employer, national insurance number and tax
office reference of the employer, contact telephone number
and email address if applying by email., In addition
details will be required of the likely number of employees,
frequency of payment, the date the first employee was
appointed and the first payment date. Also have available
the address where the payroll records will be kept and the
contact details of the person responsible for the payroll.
Where partners are involved details of each partner's
names, addresses, national insurance numbers and tax office
references will be required and the LLP number for Limited
Liability Partnerships. Limited Companies will be required
to supply the address of the company's registered office,
date of incorporation and company registration number plus
details of the directors; names, addresses, contact
telephone numbers, national insurance numbers, tax office
references
How to register as a PAYE Employer
Employers can register for PAYE online at the HMCE website.
Click Employers - Register as an Employer - First steps as
an Employer - scroll down the page until you can click
email which then presents you with online registration form
to complete and send. Alternatively contact HMCE Employer
Helpline at 0845 6070 143.
PAYE and Payroll Records
Accurate payroll records are essential, full stop.
Employers must keep payroll records for both HMCE purposes
and employees. The employee records must include the name
and address of the employee, national insurance number,
date of birth, income tax code, all payments and benefits
made and all deductions for income tax, national insurance
and voluntary deductions. When registering to operate a
PAYE system immediate arrangements should be made to ensure
these records are maintained either by setting up the
records yourself using the help and advice contained in the
Revenue CD-ROM provided to all new and existing employers
or employing a payroll service to produce the records or
using a payroll software package. Various payroll software
packages are available with different degrees of
complexity. The DIY Accounting Payroll Software is an ideal
solution for small employers being written on excel
spreadsheets and in addition to producing the deduction
calculations and payslips the payroll software also
automatically completes an excel copy of the compulsory
HMCE forms significantly easing the administrative burden.
Paying Employees
Employees must be paid the national minimum wage which for
adults was raised on the 1st October 2007 to £5.52 per
hour. Every employee must receive a payslip that shows the
amount of income tax and national insurance deducted from
the gross pay. In addition every employer must also
calculate the employer's national insurance contribution.
If you are an employer and not operating a payroll software
system such as the DIY Accounting Payroll Software then you
must design a payslip to give to your employees to satisfy
legal requirements.
HMCE Payroll Forms
P11 Employees Deductions Working Sheet
The working paper is a record of the weekly or monthly pay
for each employee and the income tax and national insurance
deductions.
P14 End of Year Employees Deductions Summary
Summary of the employee income tax and national insurance
deductions recorded on the P11 deductions working sheet
P35 Annual Employers Return
Summary detailed by employee of the annual totals of income
tax and employee's national insurance deductions and
employers national insurance liability
P45 Details of Employee Leaving
Only available from the Employer's helpline the P45 is a
certificate of the amount paid to the employee and the
income tax deducted during that employment. Every employee
that leaves the employers employment should be issued with
a P45.
P60 End of Year Employees Certificate
The P60 is a certificate of an employees total earnings and
total income tax deducted during the tax year including
previous those of previous employers and also the amount of
national insurance deducted by the current employer and
should be issued to every employee the employer has at the
5th April each year.
Each of these HMCE PAYE forms are automatically completed
by the DIY Accounting payroll software which produces excel
copies of the HMCE forms making the package highly suitable
for both inexperienced employers and those wishing to
minimise the administrative burden payroll can place on an
employer.
PAYE Payments and Online Bonuses
Deductions of income tax, employees national insurance and
employers national insurance must be paid to HMCE each
month, the standard final payment date being the 19th of
the month following the payroll month. If monthly payments
of income tax and national insurance deductions including
employer's national insurance are under £1,500 per month
then employers have the option to pay the amount due to the
HMCE on a quarterly rather than a monthly basis. Payments
of income tax and national insurance to the HMCE can be
made online electronically. At the end of each financial
year, 5th April, every employer must submit the P35 Annual
Employers Return .to HMCE detailing the amounts paid to
each employee and the deductions made for income tax,
employees national insurance and employers national
insurance with the amount that has already been paid to
HMCE in respect of the income tax and national insurance
contributions. Employers with less than 50 employees are
eligible for a tax free online bonus when the P35 Employers
Annual Return is submitted online which has been a tax free
£250 and £150 in recent years.
----------------------------------------------------
Terry Cartwright designs Accounting Software for small top
medium sized businesses
http://www.diyaccounting.co.uk
and Payroll Software packages for up to 20 employees at
http://www.diyaccounting.co.uk/payroll.htm
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