Once a business takes on its first employee usually they will be required ro register with HMRC as a new employer, this can even apply if the business only has one employee (for example if a Limited company has a sole director). New employers are required to register prior to the business’ first payday, providing information about the business and its employees.
We will be taking a look at exactly who needs to register as an employer, when they are required to register and how to register as a new employer including the information which needs to be supplied to HMRC.
Do I need to register as an employer?
You will be required to register as a new employer if your business employs someone and the following criteria applies:
• The employee is being paid at or above the PAYE (Pay As You Earn) threshold (£11,850 for the 2018/19 tax year) or the National Insurance Lower Earnings Limit (£6,032).
• The employee is provided employee benefits e.g. travel expenses or company car.
• The employee already has another job or is in receipt of a state, company or occupational pension.
When should I register as an employer?
You are required to register in advance of the business’ first payday. That being said HMRC does not stipulate specific time frame for registration, however it is important to allow plenty of time as it can take up to 2 weeks for the PAYE reference number and activation code to arrive from HMRC.
You will need both the PAYE reference number and activation code in order to set up your payroll system, which you must have set up on or before the first payday to report the information to HMRC.
How do I register as a new employer?
Usually you can register as an employer using HMRC’s online tax registration service. This is a step-by-step process allowing you to provide all of the relevant information for your registration and register for PAYE Online. Go to https://online.hmrc.gov.uk/registration/options for further information about registering online.
Once you have registered, you will be provided with an Accounts Office reference number and a PAYE reference number. You will also need to wait for a letter confirming your activation code for PAYE Online. This can take up to 2 weeks to arrive.
Occassionally some employers whose business structures or situations are unusual cannot register using the online service and must register by e-mail or telephone.
What information do I need to provide to HMRC?
In order to register as an employer, you will need to provide information about the business and its employees. If registering online, you will need to have all of this information to hand before starting the process.
All employers must provide:
- Business name (including partners’ names or company name if relevant).
- Trading address.
- Contact e-mail address and telephone number.
- Name and address for correspondence.
- Date of first payday or first payment of expenses or benefits.
- Unique taxpayer reference (UTR) (for you as an individual, or for the partnership or limited company as appropriate).
Depending on the type of business, you may also need to provide:
- Trading name.
- Limited company or LLP registration number.
- Address of registered office.
- Names of all company directors or partners.
- NI numbers of all directors or partners.
- Nature of business.
- Number of employees employed or expected to be employed (including directors).
- Confirmation of whether the business will engage any subcontractors in the construction industry.
What are the next steps?
Once registered as an employer, you are required to deduct PAYE tax and National Insurance Contributions (NICs) from your employees, and to report this information to HMRC before or on every payday. Most employers are required to report this information via the PAYE Online system. You can register for PAYE Online as soon as you receive the letter providing your activation code. You must use the activation code within 28 days of receiving the letter.
You must keep a record of accurate information about your first employee and subsequent employees. This information is required when you submit your first Full Payment Submission (FPS) to HMRC. The information you need to submit about each employee includes:
- Full name.
- Date of birth.
- Full address.
- NI number.
- Date employment started.
In order to pay an employee for the first time, you will need to run a payroll in order to calculate the relevant tax, NI and other deductions. You may run your payroll in-house, or choose to outsource it.
After you have run your first payroll and submitted your first FPS to HMRC, you will need to pay any tax and NICs due to HMRC. If you do not submit your FPS or make payment by the relevant deadlines, you may have to pay a penalty and interest may be charged.
As a new employer, you also need to be aware of several other considerations, including national living wage, working hours, sick pay, holiday entitlement and other employment rights, such as maternity pay.