Payroll Guide For New Business Owners
The Payroll guide for new business owners is provided by Thecbsltd located in Chalfont St Peter, Gerrards Cross to help if you are a new business owner at the start of setting up your business. If your business is looking to keep its payroll services in house then this Payroll Guide for new business owners page gives an insight to some of the things required of an employer when employing staff. click on the links to the HMRC relevant pages for further details.
Employing staff for the first time
There are 7 things you need to do when employing staff for the first time
Decide how much to pay someone - you must pay your employee at least the National Minimum Wage.
Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
Check if you need to apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, eg with vulnerable people or security.
Get employment insurance - you need employers’ liability insurance as soon as you become an employer.
Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you are employing someone for more than 1 month.
Tell HM Revenue and Customs (HMRC) by registering as an employer - you can do this up to 4 weeks before you pay your new staff.
Check if you need to automatically enrol your staff into a workplace pension scheme.
Register as an Employer
You normally need to register as an employer with HM Revenue and Customs (HMRC) when you start employing staff, or using subcontractors for construction work.
You must register even if you’re only employing yourself, for example as the only director of a limited company.
You must register before the first payday. It usually takes up to 5 days to get your employer PAYE reference number. You cannot register more than 2 months before you start paying people.
If your business starts employing people on or after 6 April, you’ll get your employer PAYE reference number by 17 May.
To pay an employee before you get your employer PAYE reference number, you should:
Store your full payment submission.
Send a late full payment submission to HMRC.
Sending an FPS after payday
Sending an FPS after payday
If you send a late Full Payment Submission (FPS) without a valid reason, you may get:
an online penalty warning message for the first late FPS you send each month
a penalty for reporting late
When you can send a late FPS report
In certain situations you can send a Full Payment Submission (FPS) after you pay your employee.
Your employee does not give you a P45 and is either
paid less than £120 a week or has worked with you for
less than a week.
Your employees’ payday is on a non-banking day, for
example weekend or bank holiday.
You make an ad hoc payment outside of your regular
payroll. For example you’re told after you’ve sent your
FPS about a new starter or a missed overtime
payment. (Payments made regularly outside your
normal payroll run are not ad hoc).
You pay your employee an expense or benefit where
you must pay National Insurance, but not Income Tax,
through payroll. This depends on the benefit.
You cannot calculate or report your employee’s pay in
advance because it’s based on their work on the day.
For example harvest workers paid based on how much
You make certain non-cash payments to your
You have not received your employer PAYE reference
When to report
Within 7 days of paying your employee.
On the next banking day - but enter the regular
payment date in the ‘payment date’ field and
select ‘Late reporting reason’ code G.
In your next regular FPS or an additional FPS.
Within 14 days of the end of the tax month.
Within 7 days of paying your employee.
As soon as possible within 14 days of the end of
the tax month, or when you deduct tax and
National Insurance (if earlier). For complex
situations (for example when exercising share
options) contact HMRC.
As soon as possible after you receive your
employer PAYE reference - select ‘Late reporting
reason' code G.
Put the reason for reporting after payday on your FPS for each late submission. If you do not, or if HMRC disagrees with the reason or you do not send an FPS, they may send you an online penalty warning message and a penalty.
Viewing late FPS reports in your HMRC online account
If you send an FPS in the same tax month as you paid your employees, you can view the report in
your HMRC online account from the 12th of the next tax month.
This is different if you send an FPS in the tax month after payday.
Late FPS sent (in tax month after payday) HMRC online account updated
Between 6th and 11th By the 14th
Between 12th and 19th Within 2 days
On or after the 20th - and you did not send a FPS the Within 2 days
previous tax month
On or after the 20th - and you sent a FPS the previous tax By the 12th of the next tax month
What is automatic enrolment?
Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension and pay into it. This is called 'automatic enrolment'.
The Pensions Regulator is responsible for ensuring that all employers comply with workplace pension law. It is important that you understand what you'll need to do and prepare early.
Does automatic enrolment apply to me?
Whether you're an architect, a newsagent, have a personal care assistant or a nanny, you are an employer from the day your first member of staff started working for you and you have legal duties.
If you are employing staff for the first time, your legal duties for automatic enrolment begin on the day your first member of staff starts work. This is known as your duties start date. You should start preparing early in anticipation for this, so you know what you'll need to do.
How can I find out what I'll need to do?
What you need to do will depend on whether you have staff who need to be put into a pension scheme or not. All employers have duties, which include completing an online declaration of compliance to tell us what you've done for automatic enrolment.
Use our online tool to find out what you'll need to do for automatic enrolment.
Each time you pay your staff (including new starters), you must monitor their age and earnings to see if they need to be put into a pension scheme and how much you need to pay in.
Find out more about your ongoing duties.
Understanding your costs
You may need to think about one-off costs to set up automatic enrolment, as well as the ongoing cost of paying money into the scheme and managing the process. Read more about understanding your costs.
Guidance and support
The Pensions Regulator will give you guidance and tools to help you meet your automatic enrolment duties. We will also contact you to remind you of your legal duties. You may also wish to speak with your business adviser, for example your accountant, to see what support they can give you.
Find payroll software
If you decide to run payroll yourself, you need payroll software to report to HM Revenue and Customs (HMRC). The software will help you with tasks like:
recording your employees’ details
working out your employees’ pay and deductions
reporting payroll information to HMRC
working out how much you need to pay HMRC
calculating statutory pay, for example maternity or sick pay
HMRC tests payroll software to check it can report PAYE information online and in real time (RTI).
You can choose from free payroll software (if you have fewer than 10 employees) and paid-for software that has been tested and recognised by HMRC.
You should consider which features you need. For example, some software will not let you:
record pension deductions
make pension payments
pay different people over different periods (for example both weekly and monthly)
send an Employer Payment Summary (EPS) report or Earlier Year Update (EYU) to HMRC