Posted on by Philip Allison

If you’re starting a new business in the UK and you plan to employ staff, it’s more than likely that you will need to set up a PAYE (Pay As You Earn) scheme.

PAYE is the system used by employers to deduct income tax and National Insurance contributions (NICs) from their employees’ salaries and submit these payments to HMRC.

However, in our latest blog the robinson+co payroll team have some points that you may need to consider when setting up your PAYE scheme:

Employee status

If you hire workers who are considered employees (rather than self-employed or contractors) you will typically need to operate a PAYE scheme.

Determining employment status can be complex, so it’s crucial to correctly classify your staff. HMRC provides guidelines on employment status to help with this assessment.

Thresholds

You must register for a PAYE scheme if any of the following apply:

  • You pay your employee at or above the National Insurance Lower Earnings Limit (LEL) or the PAYE tax threshold – currently LEL limit is £123.00 per week and tax threshold is £241.00 per week
  • You provide employee benefits, such as a company car.
  • Your employee has another job or receives a pension alongside their employment with you.
  • Your employee’s income exceeds the Personal Allowance (the amount individuals can earn tax-free) – currently annual allowance is £12,570.00

Employer responsibilities

Operating a PAYE scheme comes with certain responsibilities, including:

  • Registering as an employer with HMRC before the first payday.
  • Issuing payslips to employees.
  • Calculating and deducting the correct amount of income tax and NICs from employees’ salaries.
  • Keeping payroll records and reporting payroll information to HMRC on or before each payday.
  • Providing HMRC with information about new employees when they start working for you.

Ensuring Compliance

To ensure compliance with current regulations and obtain accurate advice for your specific circumstances, we would recommend consulting with an experienced accountant – and you’re in luck.

Here at robinson+co, we have a dedicated team of payroll specialists who can guide you through the ins and outs of setting up a PAYE scheme, in addition to supporting your business as it grows.

Reach out to our team today by calling 01900 603623 and find out how we can help you make your business a success.