Hello, as our company [small hotel restaurant] is going to start employing people for more than part time basis I understand that we have to set up a proper payroll system and register it to HMRC. Until now we have had everybody on a part time basis and nobody exceeded the qualifying thresholds for NIC or PAYEs. My question is what to do first when we get the first officially full-time person. As I'm fresh in payroll, I know how to deduct NICs but what about PAYE deduction, how to check how much to deduct and from whom??? Is it always 20% taken as income tax, is it taken from employer or employee or both? Sorry for such a lame question but I would like to start from the basics and believe you can help me witjh that.
You need to use payroll software to do this properly. There are several low-cost packages that help you do this. On this forum 12Pay and Moneysoft appear to be popular choices.
With a little effort and help most people find paying their staff with such software fairly easy. The software does the work of telling you how much PAYE and NI to deduct from your staff, as well as things like student loans and statutory absence payments if they're sick for example.
Please bear in mind that the moment you have a single employee earning above the Lower Earnings Limit you must report all employee earnings to HMRC at year end, whether or not the employees earn above the Lower Earnings Limit of c. £102/week.
Have you been getting P46s signed by your existing employees. If any tick box C when they start then you need to operate a PAYE scheme anyway, even if paying the employee below the NI limit.
-- Edited by Tom McClelland on Friday 18th of November 2011 01:59:34 PM
We went through this about ten months ago and the process was painless and software is free for basic Payroll from HMRC.
First thing is that you must register with HMRC as a new employer in time to get registered before your first payroll date. Can't remember how long it took, but you need a PAYE reference from them to start using the Basic PAYE Tools software and do payroll.
The software does all PAYE/NI calculations for you and keeps necessary records for annual submission, but it does not produce payslips, we do ours manually using Word just to give to staff.
that help you do this. On this forum 12Pay and Moneysoft appear to be popular choices.
