If she is employing someone and paying them then yes she should be putting them through the payroll.
Is she registered as an employer? ie does she have a PAYE scheme in place?
if the helper was invoicing her then that may be a different matter (but with different issues to clarify..) but I doubt this is what is happening??
At the moment it appears your client is paying cash wages to an unregistered employee - that is an issue.. Not only for HMRC but also potentially OFSTED?
Best advice is to operate a payroll system and subject to having a suitable tax code then there would be no tax difference..
Hope that helps
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As I understand it, if you have one employee and you pay that person below the LEL, and they have no other job, you don't need a PAYE scheme. Without a scheme, how do you submit the P46? And how does HMRC know that this person works for you, or has earned, because they have, to my knowledge, no requirement to file an SA return.
I'd be really grateful if someone would shed some light on this, as I only have minimal knowledge of payroll.
If the employee was over the taxable threshold due to say, other income and therefore needed to register for self assessment then similar criteria would also require their employer to operate PAYE.
Employers are already doing the country a favour by helping out with individual taxation :)
Matt. I guess they wouldn't have a P45 so an emergency code would ensure that a full years allowances weren't available.
I think (and I say that loosely!) the employee would sign a P46 in the new job, that said this wasn't their first job in the tax year. Then, the new employer would use the Week1 Month1 tax basis, which works on a monthly basis rather than a cumulative basis. If any tax was taken on the new earnings, the employee would have to approach HMRC to claim any rebate due. And I guess much like a sole trader figures are trusted, so would the employees.
You ask where I had heard no scheme being needed. Here is the HMRC web guide extract
When you need to register As soon as you first employ someone, you will need to register as an employer with HMRC if any of the following is true:
you're paying them at or above the PAYE threshold you're paying them at or above the National Insurance Lower Earnings Limit the employee already has another job they are receiving a state, company or occupational pension you're providing them with employee benefits
You might need to register as an employer even if you're the only person working in your business (perhaps because you're the only director of your limited company). If any of the conditions above apply to you as an employee, you'll need to register - you'll be both the employer and employee.
So this tells us that you don't need a scheme if the employee is earning below all the thresholds.
