First Time Employer

TH FS3 Page 1 HMRC 08/13
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Tax help series
Employing someone for the
first time what you need
to know
Employing someone is an important decision. If you take on an employee for the
first time you may need to register as an employer with HM Revenue & Customs
(HMRC) and set up and run a PAYE (Pay As You Earn) scheme.
Here we tell you:
what an employers PAYE responsibilities are
who counts as an employee
how to register
where to get more help and guidance.
You dont need to be in business to be an employer. If you employ domestic staff
like nannies, cooks or housekeepers in your home you may be treated as their
employer.
Employers responsibilities
Once you become an employer, you are responsible for:
calculating and deducting PAYE tax and National Insurance contributions (NICs)
from your employees pay each pay period (for example, weekly or monthly)
paying Employer Class 1 NICs
paying HMRC on time
making statutory payments, such as Statutory Sick Pay and Statutory
Maternity Pay
making Student Loan deductions
keeping accurate and up to date records
sending your PAYE information to HMRC online each time you pay your
employees, on or before the time that you pay them.
Who counts as an employee
An employee can be:
full-time
part-time
a casual worker
a director.
It is very important youre sure about whether the people who work for you are
your employees or whether theyre self-employed. This is because it affects the
way their tax and NICs are calculated and whether or not you have to operate
PAYE. Its your responsibility to get this right. You can find out more and access the
interactive employment status indicator too at hmrc.gov.uk/payerti/
employee-starting/status.htm or you can phone the New Employer Helpline
on 0300 200 3211 for advice.
Customers with
particular needs
If you need help, please let us know.
For example, if:
English is not your first language
you would like us to use a certain
format to communicate with you,
for example, Braille or Text Relay
you would like us to visit you at
home because it is difficult for you to
get to one of our offices.
For more information go to hmrc.gov.
uk/contactus/particular-needs.htm
Welsh Language Service
Gwasanaeth Cymraeg
Os ydych am gysylltu ni drwy
gyfrwng y Gymraeg gallwch naill ai:
mynd in gwefan yn hmrc.gov.uk/
cymraeg/cymraeg-rti.htm
ffonior Ganolfan Gyswllt Gymraeg
ar 0300 200 1900.
Your rights and obligations
Your Charter explains what you can
expect from us and what we expect
from you. For more information go to
hmrc.gov.uk/charter
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National Minimum Wage
The law says that you must pay your workers at least the National Minimum Wage
(NMW) rates. For more information, go to gov.uk/national-minimum-wage or
phone the Pay and Work Rights Helpline on 0800 917 2368.
Workers from abroad
Before you take on an employee you will need to check that they are eligible to
work in this country. For more information, go to hmrc.gov.uk/payerti/employee-
starting/new-employee.htm
Registering with HMRC
To find out whether you need to register as an employer, go to hmrc.gov.uk/
payerti/getting-started/register.htm
To tell HMRC you have started in business, taken on an employee for the first
time or if you need to register for VAT, you can use HMRCs online tax registration
service. Go to online.hmrc.gov.uk/registration/options
The service allows you to register for the following business taxes.
Self Assessment.
PAYE.
Corporation Tax.
Value Added Tax (VAT).
Once you have enrolled to use either HMRCs Corporation Tax or Self Assessment
online service you can set up a Business Tax Dashboard. You can use your
dashboard to see the tax position for your business across different business taxes
as it brings together information from your HMRC online services.
If you have asked someone else to do your payroll for you, youll need to tell us
their name, address and contact details.
Setting up your payroll
As the employer, you are responsible for your payroll.
If you run your own payroll system, you need payroll software that is ready for
Real Time Information (RTI) in order to send your PAYE information to HMRC online,
every time you pay an employee. You can do this in three ways.
1. Use commercial payroll software.
2. Use a payroll service provider, such as an accountant or a payroll bureau,
who will do it for you.
3. If you employ nine or fewer people, you can use one of the free payroll software
packages or HMRCs free Basic PAYE Tool.
Go to hmrc.gov.uk/payerti/getting-started/payroll-system.htm
Doing it online
You must report certain payroll information online to HMRC each time you pay
your employees. You have to be enrolled with PAYE Online before you can do that
so you should enrol as soon as you can.
If you register using the online tax registration service, youll also be automatically
enrolled for PAYE Online for employers. You will still have to activate it using an
Activation Code (also known as an Activation Pin) which we will send you. It may
take up to ten days to arrive.
We have a range of services
for people with disabilities,
including guidance in
Braille, audio and large
print. Most of our forms are
also available in large print.
Please contact us on any
of our phone helplines if
you need these services.
These notes are for guidance only and
reflect the position at the time of writing.
They do not affect any right of appeal.
HMRC Digital Service
Month 2012 Crown copyright 2013
Software packages and other
payroll options
If you employ anyone, even if its only
yourself (as a director), then your
payroll is an essential part of running
your business.
To help you make the right choice
when deciding on a payroll system or
provider, go to hmrc.gov.uk/payerti/
getting-started/payroll-system.htm
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We have a range of services
for people with disabilities,
including guidance in
Braille, audio and large
print. Most of our forms are
also available in large print.
Please contact us on any
of our phone helplines if
you need these services.
Month 2012 Crown copyright 2013
For more help
Internet
Go to hmrc.gov.uk/payerti/getting-
started-more/index.htm to find:
the New employer getting started
section for new employers
advice on setting up and operating
your payroll
links to key PAYE forms, tools
and publications.
Go to gov.uk/employing-staff to find
general guidance on what you need to
do as an employer.
Employer Bulletin
HMRC publishes this three times a
year. It brings you the latest employer
and payroll news. Go to hmrc.gov.uk/
payerti/forms-updates/employer-
bulletin
New Employer Helpline
The New Employer Helpline,
0300 200 3211, is especially for new
or inexperienced employers. It is open
from 8am to 8pm, Monday to Friday,
and from 8am to 4pm Saturday.
Online presentations and
videos to help you
There is a range of products and
services, including online presentations
(webinars) and e-learning, to help you
understand the different aspects of
starting a business. Go to hmrc.gov.uk/
startingup/help-support.htm
to see the range of help and
support available.
You will also find lots of bite-sized
tax information videos on HMRCs
YouTube pages. Go to youtube.com/
user/HMRCgovuk
If you registered by a method other than the online tax registration service, such
as the online email form, you will need to wait for your PAYE reference number to
arrive before enrolling for PAYE Online for employers yourself.
For full details, go to hmrc.gov.uk/payerti/getting-started/register.htm
Paying HMRC
You are responsible for calculating and deducting PAYE tax and NICs from your
employees pay. There are monthly deadlines for paying these deductions to
HMRC, as well as any Student Loan repayments or tax deducted from payments
to subcontractors. We recommend that you pay electronically. You can get more
information at hmrc.gov.uk/payinghmrc/paye.htm
Keeping on top of deadlines
Each tax year starts on 6 April in one year and ends on 5 April the following year.
There is a regular cycle of filing returns and making payments to HMRC. To access
the monthly employer diary, go to hmrc.gov.uk/employers and under quick links
select Employer Diary.
Dispensations
To save you time and money by reducing your reporting requirements for
certain expenses and benefits that you pay to your employees, you can apply
for a dispensation.
To find out about the kinds of expenses and benefits that you can include in a
dispensation and how you go about applying for one, go to hmrc.gov.uk/payerti/
exb/schemes/dispensation.htm
August 2013 Crown copyright 2013

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