Accountrivia covers all your payroll needs, including pensions and CIS where applicable.

The role of an employer is very important. As an employer, you will be the one who makes the contracts for your employees. At the same time, you will guarantee that they receive fair treatment within the workplace.

Although having these employees working for you is beneficial, as an employer in the UK, you will be responsible for paying your employees, and will be required to use PAYE in connection with their payroll. Employers are also required by HMRC to pay some employees’ PAYE. At first, the process might seem intimidating. However, once you are set up, you will find that it is quite simple, and you can easily get the ball rolling.

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Employers should start setting up employee payroll immediately, right after hiring their very first employee. Payroll should be set up prior to paying them their first salary or wages. You should not leave this to the last minute if you have unexpected issues to attend to.

Before you start paying your employees using PAYE, there are some things that you need to do:

• As an employer, you must register with HMRC. After accomplishing this, HMRC will send you a PAYE reference number along with a welcome package. Wait for five working days until HMRC gets back to you.

• Ask for a national insurance number and an employee’s tax code. These are needed when you are processing their payroll.

• If your employee has had a previous employer, then you should ask for a P45. This will give you an update on how much the employee currently owes for the tax year. If they don’t have access to any or they can’t provide you with any, then HMRC will give you a checklist to assist you in computing how much they may owe.

Now you already have all the things you need in processing your first employee’s pay with HMRC using PAYE.

With regards to payroll tax deduction, one of your greatest concerns should be national insurance contributions. This is because, aside from paying NICs for your employees, you’ll also need to pay for yourself. NIC thresholds are much lower compared to formal taxes, so most likely you will have to pay them.

Furthermore, by the time your employees have started to earn a certain amount, it is also required that you compute the amount that they owe when it comes to income tax. Deductions also include pensions, student loans, and other contributions that need to be withheld.

It is important to remember that the circumstances of every employee differ depending on how much they earn. Therefore, you should make sure that you have all the essential information for every employee.

If you are late in sending your Full Payment Summary or you have not sent one, then HMRC will send you a late filing notice. You will probably need to pay a penalty if you can’t give any valid reason for sending the summary late or not sending one at all.

You should see to it that the Full Payment summaries that you send are complete and be sure to send them prior to the cutoff date. If you failed to do so or the payrolls that you send are incomplete, then this could create a negative impact on your employee’s benefits.

Keep in mind that if you are a new employer, there is a greater risk that your PAYE scheme might be closed if within 120 days you fail to send a Full Payment Summary. Hence, if you apply as an employer, be sure that you hire employees and pay them regularly. If not, then you might have to go through the whole process of registering as an employer all over again.

Statutory payments include statutory adoption pay, statutory maternity pay, and statutory sick pay. All of these are processed through PAYE and payroll, at the same time, they should be reported to the HMRC.

If you are one of those employees who have made statutory payments, then there are chances that you can claim back some of these payments. However, the precise amount that can be recovered will greatly depend on National Insurance Contributions every year.

Employees are qualified to have 28 weeks of statutory sick pay. New mothers in the UK are provided with as much as 52 weeks of maternity leave, which is also applicable to adoption leave. Presently, paternity leave is set between one to two consecutive weeks.

Employers in the UK are required to register their employees in a pension scheme in case they have not enrolled in any. However, if the earnings of the employees do not exceed £120 per week, then you are not required to register your employees in a pension scheme.

• After you have registered your employees in a particular pension scheme, then there are some things that you need to do:

• The minimum contributions should be paid every 22nd of each month.

• Employees are allowed to leave the pension scheme and employers must pay what is owed to them.

• Employees are allowed to rejoin the pension scheme once a year even if they choose to leave.

Usually, the pension amount is taken from the employees’ salaries; however, in some contracts, it will be the employer who is solely responsible for making these payments.

RTI or Real-Time Information is the most advanced online system of HMRC which is being used for monitoring all payroll information. After you have submitted the information, you cannot revoke it, hence, mistakes can be very costly. Any typical payment reporting can be accomplished through RTI. Consequently, employers should let HMRC know if their employee quits or if they fire an employee, as well as if they hire a new employee. Or if there are some changes in the employee’s circumstances

Aside from the monthly reports that you submit to HMRC, you are also required to complete a year-end report that must be submitted by April 5 or at the end of the tax year. In other words, you should not do this process to the last minute since it can be very time-consuming. Usually, your year-end report will be composed of the following:

Provide each employee a Form P60 which consists of a summary of all their earnings and deductions for the year.

Report to HMRC all your tax deductions, benefits, and earnings for every employee.

At the start of the new tax year, you could also:

Make an update on all your payroll software.

Make an update on the payroll records of all your employees.

If you are an employer who is having some difficulties dealing with the process of payroll taxes and PAYE, then you can always hire a tax professional or an accountant to manage your PAYE for you. In this way, you can always ensure that everything is above board and, at the same time, you can avoid running into any trouble with HMRC. If hiring is an additional expense that you cannot afford, then you can always hire a freelancer which you can pay per hour, or you could take some time to understand how PAYE works. Either way, learning how PAYE works can be advantageous to you as an employer. If you are having trouble understanding anything, then you can always get in touch with HMRC’s payment helpline.