When you decide that you are going to employ someone to work for you, you need to contact HMRC and register with them, so they know you are intending to act as an employer.
You can do this one of two ways - registering for online services yourself through the HMRC's website or hire and authorise us to handle this responsibility on behalf of you.
Regardless of which way you choose to do it, you need to keep in mind the obligations you have to an employee as their employer as outlined in employment law. Please take some time to look at this(link to other services>employer/contractor legal support) for legal services provided by Employer Support Centre.
Operating NI (National Insurance) and PAYE are your responsibility as an employer. Along with these there also other specific statutory payments you may be required to make occasionally that you should familiarise yourself with, including:
Employers or agents on their behalf are normally required for each pay period during a year to make payroll submissions regularly that detail deductions and payments made from employees on or before the day they are paid out, as outlined under RTI which was established in April of 2013. Our service is compliant with RTI regulations.
We will calculate the salaries of your employees and the necessary deductions you are required to pay to the HMRC on their behalf for each pay period.
To calculate the tax due for one of your employees we take their gross pay and deduct an appropriate deduction for their tax-free pay, based on their specific circumstances (using the pay date and their coding notice). PAYE software tools or software are then used to calculate the amount of tax payable on the remainder from the above calculation.
In most cases the individual's circumstances during the last tax year are taken into consideration, as a cumulative amount, to calculate their tax.
In order to calculate the salaries of your employees successfully and accurately we will tell you exactly what we need. As a rule of thumb though, you should always ask new employers for the P45 they received from their last employer. This will ensure that we use the correct tax code for individual employees.
NI is calculated on a non-cumulative basis and is paid by the employer and employee on the gross pay that the employee receives in a specific tax month or week.
Payments to the HMRC
On the 19th of the month following the payment, the NI and Tax should be paid directly to HMRC. A tax month runs from the 6th to the 5th of the following month, therefore if your employee was paid on the 25th of September (with the tax month being the 6th of August to 5th of September), the NIC and Tax that needed to be paid would have to be done by the 19th of September.
Although for cash flow reasons we suggest you pay monthly, if you as an employer have monthly payments lower than £1,500, you can opt to pay quarterly instead.
You need to either maintain digital copies of or complete the following forms:
• P11 Deductions working sheet. Both the computer generated version and the physical form should be maintained for each of your individual employees. It outlines each employee's pay and deductions for every week/month of a tax year.
• P60 End of year summary. This is a form that you should be completed on behalf of and given to each of your employees employed during a tax year.
• P45 Details of employee leaving. This form details an employee's earnings and tax paid for the tax year up to that point and should be given to them if they decide to leave. All new employees should pass on the version of the form they received from their last employer.
• Starter Checklist. You need to advise HMRC when a new employee starts, so you are allowed to pay them following RTI regulations. There is necessary information that can be obtained from an employee's P45 if they have one from their last job.
If you have employees who earn more than £8,500, are paid expenses and receive benefits you may have to fill out the P11D form too. Please keep in mind that there are different rules for company directors.
You may be required to pay a penalty if you:
Workplace pension law has changed. As of 2008 and the Pensions Act established in that year, all UK employers are required to place certain members of their workforce into a pension scheme and contribute to it. This is known as automatic enrolment.
Regardless of whether you work as a personal care assistant, architect or hairdresser; if you employ at least one other person, you are considered to be an employer and therefore have certain duties you need to follow by law.
It is important that you understand your obligation as an employer and act appropriately. Below we have outlined some important details.
It is your responsibility to deduct contributions from the salary of your staff and pay these and your own contributions to the scheme in the correct manner and on time.
You risk being fined by the Pension regulator if you do not contribute to your staff pension scheme in the correct manner or on time.
You have specific payment information and records that you are required to keep.
How much you must pay
The scheme's rules dictate how much you should contribute to the staff pension scheme. If though, you are using the scheme by automatic enrolment, there are minimum contributions you are required to make.
In the table below must pay into your employee's pension scheme. They are currently a total of contributions of 2% with a minimum of 1% contribution from you, the employer..
Over time, minimum contributions are being introduced. Pension scheme contributions are normally paid as an earning percentage or a fixed amount.
date to *05/04/18
(including 1% staff contribution)
|*06/04/18 — *05/04/19||2%||5%
(including 3% staff contribution)
(including 5% staff contribution)
Your minimum employer contribution
We will work out the minimum contribution for each employee you need to automatically enrol as part of our payroll service (which is subject to an extra fee).
Contributions for pensions are normally expressed as an earnings percentage or fixed sum. You will need to confirm the salaries with your pension trustee or provide regularly if contributions are expressed as an earnings percentage.
When you are calculating pension contributions, you also need to work out which staff payment elements , which are subject to any overriding requirements as part of pension legislation, for instance automatic enrolment. You may make the decision that overtime payment or bonus payment is not pensionable and that only your employee's basic pay is. You need to inform your pension scheme what you decide.
We use an automated system that calculated contributions and then makes the appropriate deductions from your employee's pay. You need to make sure that your chosen pension scheme is compatible with our payroll system. You also need to tell us the earnings you want us to use to calculate pension contributions and what rate of contribution is due.
When you must pay your contributions
You need to pay the contributions on time to your employee's pension scheme. It is crucial for us to receive information from you on time as this includes calculating and deducting contributions from the salary of your staff. You also need to agree with your provider or trustee about the due dates for paying pension contributions.
When you deduct pension contributions from your employee's pay, the law requires that you pay these into the scheme no later than the 22nd of the following month.
We suggest that you set up either a direct debit or reminder, so that you make contributions on time, as it is your responsibility to do so.
If you don't pay on time, you run the risk of the regulator fining you.
Keeping payment information and records
The main cause of disputes and payment failures that arise between employers and their pension scheme trustee or provider is out of date or incorrect information.
It is crucial that you keep the information and records regarding contribution you make into your pension scheme for a minimum of 6 years (in the majority of cases). Doing this will ensure you make the correct contributions and that you have the appropriate evidence if there is any dispute.
The records you keep should include the following:
You need to make sure you keep the information on membership of the scheme and contributions up to date and communicate if and when changes are made to your pension scheme trustees or provider.
It's good practice to provide the payment information that follows, as part of the ongoing, daily administration arrangements:
In order to meet their duties for reporting material payment failures and monitoring contributions to the regulator, your pension scheme trustees or provider need this payment information.
When you set-up this scheme, you need to agree a process for this. This could include giving you updated information regarding earnings at the same time you pay the contributions to the scheme.
If you have any questions regarding this service or would like to receive a quote, please contact us as we are always keen to take on as much work on behalf of our clients as we can. Please give us a call on 020 7372 8960 or write us an email to [email protected]