| If you have your own business and have reached a | | | | PAYE kicks in when your employees' earnings reach |
| point when you can no longer do things alone, you will, | | | | the National Insurance LEL (Lower Earnings Limit); this |
| no doubt, have entered the realm of the employer. | | | | is set at the beginning of each tax year, so, if you are |
| You are now more than just a simple business owner | | | | unsure of what it is speak to your accountant and/or |
| responsible only for your own success and that of | | | | HMRC. |
| your venture; you now have other people's fiscal | | | | To work out how much to deduct from your |
| health in your hands. | | | | employees' pay you will need to use their tax code |
| It is doubtful that your employees will have come to | | | | and NI category letter, information that will be found on |
| work for you through the goodness of their hearts, | | | | their P45 form. |
| and so you are probably going to be paying them | | | | Employers must apply the PAYE system to |
| regularly for their services; having run the gauntlet of | | | | everything paid to their employees as a consequence |
| getting a decent staff member on board and agreeing | | | | of their employment, including: salary or wages, |
| a wage that suits everyone involved, you now have to | | | | overtime and tips, bonuses and commission, cash |
| look at the mechanics of paying them and as with so | | | | expenses, sick pay, maternity pay, shares and |
| many of the tasks involving money performed by the | | | | redundancy pay. |
| average business owner, this one requires you to | | | | At the end of each tax year you will need to submit |
| meet the needs of HMRC. | | | | an Employer Annual Return (P35 and P14s) to HMRC; |
| As an employer in the UK you are bound by law to | | | | these forms summarize your payroll activity, allowing |
| operate the PAYE system when paying your staff. | | | | the Tax Man to confirm that the correct deductions |
| PAYE or 'pay as you earn' is how HMRC collect | | | | were made and paid throughout the year. |
| Income Tax and National Insurance contributions from | | | | Just because your payroll may be being administered |
| employees. The clue is, of course, in the name, tax and | | | | by an outside agency or your accountant this does not |
| NI are deducted from pay as it is earned, and as you | | | | absolve you of your PAYE responsibilities, it is |
| are the one paying, you have, by law, to be the one | | | | important to check that the correct amounts are being |
| deducting these charges. | | | | deducted and paid, as it will not be your accountants |
| It is important to pay the deductions to HMRC promptly | | | | that HMRC will hold liable in the event of these levies |
| each month (or quarter if you have made special | | | | going unpaid; far too many employers view this as an |
| arrangements) because late payment by employers | | | | area of taxation that they can hand over to someone |
| can (and usually does) result in your having to pay | | | | else, but, just as with all else in your business, the buck |
| interest (a fine by any other name...) | | | | certainly will stop with you. |