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Why should you read this guide?

As a new business you may be looking to take on staff. You may also be counted as a member of staff of the business if you are drawing a wage as a director for example. If this is the case then you need to follow the procedures for PAYE.

Background

Pay As You Earn (PAYE) is the government's scheme used for collecting income tax and National Insurance contributions from employees. This scheme is administered by the employer and needs to follow set rules. Payments are made to HMRC either monthly or quarterly and it is your responsibility to get them right. If you do not pay the right amount or make the payments late then you may be liable to interest.

Registering as an employer

You do not always need to register as an employer just because you take on an employee but if any of the following apply then you do need to register:

• the employee already has another job
• they are receiving a state or occupational pension
• you're paying them at or above the PAYE threshold
• you're paying them at or above the National Insurance lower earnings level
• you're providing them with employee benefits

Remember you also need to register if you are the only employee i.e. a director of your own company. In most cases you can register online or by telephone to the New Employers Helpline. They will then send you all the forms and information that you need.

Forms to complete

There are a number of important forms that you need to keep when you have employees. Below is a quick run through of the most common.

P45 - This form will be given to you by a new employee. You need to comlete certain parts as instructed and send part of it to HMRC.

P46 - Where a new employee does not have a P45 to give you e.g. if they still work for someone else as well you need to complete form P46 and send this to HMRC.

P60 - This form needs to be given to each employee at the end of the tax year to show what they have earned and paid over the period.

P11 - This is the form that you use to record the employee's pay and deuctions every week/month.

P14 - Is the summary form you complete for every employee at the end of the tax year and send to HMRC by 19 May - the P60 is on the back of this form.