When you decide to take on employees, there are a number of checks you must carry out initially. Before employing a person, you must decide what their employment status is and whether they are legally entitled to work for you. If you are employing staff for the first time, you may also need to register for a PAYE scheme with HM Revenue & Customs.
If an employee has another job, state pension or an occupational pension you will have to operate PAYE. You will also have to operate PAYE if you pay more than the earnings threshold, which varies each year. For the year 2012-13, the threshold is £156 per week, £675 per month and £8,105 for the year. You will have to consider the payment of wages, as the minimum wage rules apply.
All PAYE forms now have to be filed online, including forms P45 and form P46. If an employee has left another job before becoming employed by you, he will have a form P45 with details of pay and tax up to the date of leaving. If an employee doesn’t have this form, a P46 should be completed and submitted to HMRC. You also have the responsibility of deducting National Insurance and therefore have to ensure that an employee has a National Insurance number, or take steps to obtain it.
There are many scenarios which are treated slightly differently, like students, casual workers and others. It is advisable to seek professional advice to ensure you fulfil your legal obligation to HMRC.
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An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.