Since the introduction of HM Revenue & Customs’ PAYE Real Time Information (RTI) reporting system in April 2013, employers have been required to make regular submissions on or before the dates that employees are paid which include details of the amounts paid and deducted.
If you do not already have a PAYE scheme, when taking on a new employee you will need to consider the amounts that they are to be paid, as under RTI there is no requirement to report on amounts paid to employees until they are paid over the ‘Lower Earnings Limit’, which for the 2015/16 tax year is £112 per week. Once your employee has been paid above this rate, you will be required to set up a scheme if you do not already have one and submit details of the amounts you have paid to them from the previous 6th April together with any future payments them.
Where the RTI scheme differs from the old PAYE regime, is that if you have an active PAYE scheme then details of all employees should be submitted, regardless of how little they are paid and whether or not any tax and national insurance is deducted from them.
You should also bear in mind whether your prospective employee has any additional sources of income, as should they have another job or are in receipt of any taxable benefits, this may also trigger the requirement to add them to a PAYE scheme and make RTI submissions. You should therefore always ensure that you obtain a P45 where necessary and ask any new staff to complete a ‘new starter form’ in order to collect the relevant information. This will allow you to establish the position on whether or not a PAYE scheme will be necessary.
It is very important that you obtain this information when taking on a new employee, as this will also establish the tax code that is to be used when processing the payroll or considering whether a scheme will be required.
Finally, we recommend that when taking on employees, contracts of employment be considered, as these can be a useful tool when establishing items such as contracted hours and holiday entitlements, or further down the line should the relationship between employer and employee break down, details relating to notice periods.
The rules surrounding PAYE can be complex, and with the introduction of workplace pensions and auto-enrolment, seeking advice from a professional on these issues is now even more paramount.
For further advice on this subject and any other area of accountancy or taxation, please contact Sam Carter from our Hastings office on 01424 720222 or email firstname.lastname@example.org or Louise Franklin from our Bexhill office on 01424 730300 or email email@example.com
Member since: 25th November 2014
I work for Ashdown Hurrey, where I qualified as a chartered certified accountant in February 2014.
I joined the practice after completing my degree in accounting and finance at Manchester Metropolitan...