I have a client whos a VERY small Ltd. company and she runs a charity shop (had to limited on instruction from council) anyway...
...She has to get some extra help in this summer to help with opening times. Now rather than looking and hiring for someone her 16 yr old daughter wants to help. Now if she was a sole trader she could get away with paying gross wages and not bothering with PAYE, but as she's ltd, will she have too register for PAYE and do things properly (which increases my work load) or can we just 'avoid' it altogether and just pay gross wages...?
But I thought you could just pay gross wages as long as the individual did there own return and claimed what they earned to HMRC? Did I read that somewhere??? :/
But I thought you could just pay gross wages as long as the individual did there own return and claimed what they earned to HMRC? Did I read that somewhere??? :/
I'm afraid that is completely wrong.
Employment is not a matter of choice, it is a matter of the facts of the engagement. Employees must have PAYE/NI deducted and RTI filed, and the act of choosing to pay someone gross doesn't mitigate that obligation. The circumstances described are employment.
If the weekly earnings of all employees are less than £109, and no-one has another job, then you don't have to start a PAYE scheme. The moment any employee exceeds £109 in any week or any new starter already has another job you must start a PAYE scheme and declare RTI every time an employee is paid.
And it makes no difference whatsoever whether the employer is sole trader or Ltd. If you employ someone you are an employer, with all of the regulatory and reporting consequences.
-- Edited by Tom McClelland on Monday 29th of July 2013 09:32:18 AM
Tom has explained it all but one thing I'm wondering about is how the director pays herself? You say she isn't registered for PAYE so presumably she earns under £109 herself?
If the weekly earnings of all employees are less than £109, and no-one has another job, then you don't have to start a PAYE scheme. The moment any employee exceeds £109 in any week or any new starter already has another job you must start a PAYE scheme and declare RTI every time an employee is paid.
Re the rest - agree that status of 'employer' (ie sole trader or Limited company) has no bearing on whether payroll is run - it has to be. Its a bit more work at the outset to get things set up, but with the right software it can be a 5 minute weekly job thereafter
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
If the weekly earnings of all employees are less than £109, and no-one has another job, then you don't have to start a PAYE scheme. The moment any employee exceeds £109 in any week or any new starter already has another job you must start a PAYE scheme and declare RTI every time an employee is paid.
