You usually have to pay your employees through PAYE if they earn over a certain amount. You don’t need to pay self-employed workers through PAYE.
If an employee has to be paid through PAYE you must tell HM Revenue and Customs (HMRC) when you take on a new employee and be registered as an employer.
Before you pay your new starter you must get the employee information to work out their tax code, if you don’t have their P45 from their previous employer, use HMRC’s ‘starter checklist’ (which replaced the P46).
You’ll need your employee’s:
- National Insurance Number
- Date of birth
From your employee’s P45, you’ll need their:
- full name
- leaving date from their last job
- total pay and tax paid to date for the current tax year
- student loan deduction status
- National Insurance number
- existing tax code
You must keep this information in your payroll records for the current year and the three following tax years.
You must then register your new employee with HMRC by including their details on a Full Payment Submission (FPS) the first time you pay them.
On this FPS, include:
- information you’re collected from them
- the tax code and starter declaration that you’ve worked out
- pay and deductions (eg tax, National Insurance and student loan deductions) since the started working for you – don’t include figures from their previous job.
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