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PAYE and Employing StaffIf your company is now in a position to take on staff, then there are a number of procedures you need to consider before you begin employing:
Before your new staff members begin working, ask your tax office to send you leaflet IR53 "Thinking of taking some-one on". It explains the basics of PAYE and NICs. It also has brief details on how to work out how much to deduct from your staff’s pay. LET YOUR PAYE OFFICE KNOW YOUR INTENTIONS The PAYE office will need to know the following details: General information about your business - Trading name, description of your business, company registration detail etc... Payroll information - number of staff which you intend to employ, who will be responsible for PAYE deductions etc.. Information about the your intended employees. Form P223 found at the back of leaflet IR53 should be used and has all the above information which you need to complete and return to your PAYE office. You can find the address of the PAYE office by contacting your own tax office.
[UP] WHAT HAPPENS NEXT? Once the PAYE tax office know your intentions they will issue you with a PAYE tax reference number which you must use each time you correspond with the PAYE office. The PAYE office will also send you a "New Employees Starter Kit". This pack contains information and various cards relating to PAYE and NIC pay deductions. "P8 Cards" gives you easy to follow instructions on how to deduct PAYE and NICs from your employees pay.
[UP] WHEN YOUR EMPLOYEE STARTS WORKING FOR YOU Once your employee start work, ask him/her for their P45 form which they should have from their precious employer. Complete part 3 of the form and send it to your PAYE office. Keep part 2. Should your employee not have the P45, you will need to complete form P46 which can be found in your starter kit. After employee has signed this form return it to the PAYE tax office.
[UP] WORKING OUT TAX AND NIC Every one is allowed to earn a certain amount of money before tax or National Insurance is deducted from their pay.
[UP] TAX AND NIC TABLES There are two parts to the tables used to work out tax and national insurance contribution deductions. The first part concerns the employees code and shows how much to add or subtract from your employees pay. This table is known as the "Pay Adjustment Table". The second table deals with the amount of tax due on the taxable pay.
[UP] AT THE END OF THE TAX YEAR At the end of the tax year you will need to inform your tax office as to how much you have paid your employees during the year. This means they you will need to complete three vital forms:
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