A How To: How and When to Register for PAYE
Being a first-time employer can be a daunting prospect at first. All the responsibility for someone else’s pay at the end of each month, outsourcing tasks or entrusting processes to people that you used to take care of yourself. The HR, legal and taxes side of things are just the tip of the iceberg.
However, at the very same time, it’s a sign of your growth, progress and the chance for your business to take the next step.
This article will focus on making sure you are compliant with HMRC, that you are keeping your payroll records together and what you need to provide to stay compliant.
If you’re a sole director of a company and you already have an accountant as your advisor, you might already have a PAYE registration in place. It’s very common for directors’ of Limited Companies to receive a basic salary each month which helps with tax efficiency. If this is the case then usually you can just add your new hire to this existing scheme.
It’s not advisable to have multiple PAYE schemes as one scheme can cover various ‘calendars’ or pay periods. This means to say you could have some staff being paid monthly, some weekly and some fortnightly - they are all processed at different times but using the same PAYE scheme.
If you’re entirely brand new and have no registration in place at all, then you need to log in to your online HMRC portal (or create one if you are yet to do so) and register your business for PAYE. Please note, you do not need to be a Limited Company to register for a PAYE scheme - you can do this as a sole trader, partnership, LLP or a Limited Company and there is no restriction.
For the registration, you will need to have your National Insurance Number to hand, or that of the directors’, as well as the company details such as the company Unique Tax Reference (UTR) number and the company registration number (CRN). If you have an advisor, then it might be easier for them to go through this process. If you are a director or business owner and you do not have a National Insurance number, then you can call HMRC instead, and they can create the PAYE scheme for you over the phone.
Although this usually can be done entirely over the phone, and so is much quicker than following the registration online and waiting for the registration to be posted out to you. However, you can only use this service if you cannot register online, one of these primarily being due to a lack of NI number for the director or business owner.
Now, HMRC have their Basic PAYE Tools to help employers submit their information on time within their given deadlines. However, you might not be shocked to hear that we recommend you do seek a professional to assist this with you for your pay runs moving forward. This doesn’t have to be us 😉
The reason being is that there is a lot of complexity around running payroll that can make it seem easy on the surface, but you’re actually declaring and deducting other peoples earnings and taxes and paying this over to HMRC, like a glorified tax collector. As such, it’s vital you get this right. Firstly for HMRC so that everything is being done correctly, but secondly so that your staff are being paid the correct amount with the right deductions.
There are many payroll systems out there, as well as accountants and payroll bureaus that can help you to manage the payroll efficiently and effectively. Our payroll tool of choice, which we use with all of our clients, is Xero Payroll. It is clear and user-friendly while slotting right into your existing Xero subscription if you have one.
Xero Payroll enables you to add employees, manage their time off and even has time tracking via timesheets to automate some of the data entry for you. It still calculates the important statutory leaves, student loans and of course pensions. Speaking of which…
So the age of ‘Staging Dates’ is well and truly over now as these have slowly been phased out and replaced with all existing eligible businesses operating a workplace pension. For new employers from 1st October 2017, you will have a ‘Duties Start Date’, and this is from the very first day you hire someone. Now, you are still allowed to postpone by 3 months but a scheme still needs to be in place, and employees need to be notified. It’s an extra step that a few years ago wasn’t required, but it’s here to stay, and the workplace pension helps your employees to save for their futures.
So there are a few dates for the diaries, but the main one is the RTI Filing date. This is the Real Time Information Filing date, and it is the report HMRC receive from whichever software you use to notify them of the tax due, employees who are working and of any statutory adjustments, like maternity leave or sick pay.
This needs to be submitted on or before the payday. So if you pay your employees on the 28th of each month, then this is when the payroll needs to be sent to HMRC via RTI, or before. As for the PAYE and NI due to HMRC, which includes any student loan deductions, needs to be paid to HMRC by 22nd of the following calendar month. A pay run from 1st April to 30th April would be due by 22nd May. If you plan to pay by cheque (is this the 1970s?) then you need to ensure this reaches HMRC by 19th May, in this example.
Finally, your workplace pension will have it’s own submission deadline too and is usually set up to mirror the timeline of your payroll. However, this isn’t always the case, so I recommend you check with your pension provider, if you already have one, just to make sure. You usually have until this deadline to submit and pay the information.
There are lots of responsibilities by employing people, from making sure you are paying people the correct amounts above National Minimum and Living Wage depending on their age, to ensuring holiday entitlement and maternity leave.
If you would like someone to take care of the day-to-day payroll duties, then get in touch to find out how we can free up your time and assist your business.
About the author
Ben Nacca is an accountant but is nothing like the stereotype you have visualised in your mind! He has worked in the accounting industry for almost a decade and is CEO here at Cone.
Ben loves travelling the world, playing video games and playing his acoustic guitar whenever he finds the time between spending time with his two chihuahuas, Hugo and Pablo!