Payroll Essentials for New Employers

When should an Employer Register for PAYEwage which for adults was raised on the 1st
Employers should register as soon as possibleOctober 2007 to £5.52 per hour. Every
when a qualifying employee is appointed and mayemployee must receive a payslip that shows the
register up to four weeks prior to the firstamount of income tax and national insurance
employees pay day.deducted from the gross pay. In addition every
You should register as an employer and operate aemployer must also calculate the employer's
PAYE system if your employee already has othernational insurance contribution. If you are an
employment, or if the employee's earnings areemployer and not operating a payroll software
equal to or above the PAYE threshold. The PAYEsystem such as the DIY Accounting Payroll
threshold for 2007-08 is earnings of £100Software then you must design a payslip to give
per week or £435 per month at which pointto your employees to satisfy legal requirements.
income tax and national insurance deductions mayHMCE Payroll Forms
be required. These limits include the value of anyP11 Employees Deductions Working Sheet
benefits in kind that may be paid.The working paper is a record of the weekly or
Employer Registration Information Requiredmonthly pay for each employee and the income
Generally the information to be provided includestax and national insurance deductions.
the business name, trading address, type ofP14 End of Year Employees Deductions Summary
business, name and address of the employer,Summary of the employee income tax and
national insurance number and tax officenational insurance deductions recorded on the P11
reference of the employer, contact telephonedeductions working sheet
number and email address if applying by email.,P35 Annual Employers Return
In addition details will be required of the likelySummary detailed by employee of the annual
number of employees, frequency of payment,totals of income tax and employee's national
the date the first employee was appointed andinsurance deductions and employers national
the first payment date. Also have available theinsurance liability
address where the payroll records will be keptP45 Details of Employee Leaving
and the contact details of the person responsibleOnly available from the Employer's helpline the
for the payroll.P45 is a certificate of the amount paid to the
Where partners are involved details of eachemployee and the income tax deducted during
partner's names, addresses, national insurancethat employment. Every employee that leaves
numbers and tax office references will bethe employers employment should be issued with
required and the LLP number for Limited Liabilitya P45.
Partnerships.P60 End of Year Employees Certificate
Limited Companies will be required to supply theThe P60 is a certificate of an employees total
address of the company's registered office, dateearnings and total income tax deducted during the
of incorporation and company registration numbertax year including previous those of previous
plus details of the directors; names, addresses,employers and also the amount of national
contact telephone numbers, national insuranceinsurance deducted by the current employer and
numbers, tax office referencesshould be issued to every employee the
How to register as a PAYE Employeremployer has at the 5th April each year.
Employers can register for PAYE online at theEach of these HMCE PAYE forms are
HMCE website. Click Employers - Register as anautomatically completed by the DIY Accounting
Employer - First steps as an Employer - scrollpayroll software which produces excel copies of
down the page until you can click email which thenthe HMCE forms making the package highly
presents you with online registration form tosuitable for both inexperienced employers and
complete and send. Alternatively contact HMCEthose wishing to minimise the administrative
Employer Helpline at 0845 6070 143.burden payroll can place on an employer.
PAYE and Payroll RecordsPAYE Payments and Online Bonuses
Accurate payroll records are essential, full stop.Deductions of income tax, employees national
Employers must keep payroll records for bothinsurance and employers national insurance must
HMCE purposes and employees. The employeebe paid to HMCE each month, the standard final
records must include the name and address ofpayment date being the 19th of the month
the employee, national insurance number, date offollowing the payroll month.
birth, income tax code, all payments and benefitsIf monthly payments of income tax and national
made and all deductions for income tax, nationalinsurance deductions including employer's national
insurance and voluntary deductions.insurance are under £1,500 per month then
When registering to operate a PAYE systememployers have the option to pay the amount
immediate arrangements should be made todue to the HMCE on a quarterly rather than a
ensure these records are maintained either bymonthly basis.
setting up the records yourself using the help andPayments of income tax and national insurance to
advice contained in the Revenue CD-ROMthe HMCE can be made online electronically. At the
provided to all new and existing employers orend of each financial year, 5th April, every
employing a payroll service to produce theemployer must submit the P35 Annual Employers
records or using a payroll software package.Return .to HMCE detailing the amounts paid to
Various payroll software packages are availableeach employee and the deductions made for
with different degrees of complexity. The DIYincome tax, employees national insurance and
Accounting Payroll Software is an ideal solution foremployers national insurance with the amount that
small employers being written on excelhas already been paid to HMCE in respect of the
spreadsheets and in addition to producing theincome tax and national insurance contributions.
deduction calculations and payslips the payrollEmployers with less than 50 employees are eligible
software also automatically completes an excelfor a tax free online bonus when the P35
copy of the compulsory HMCE forms significantlyEmployers Annual Return is submitted online which
easing the administrative burden.has been a tax free £250 and £150 in
Paying Employeesrecent years.
Employees must be paid the national minimum