Setting up a payroll

Produced by Tolley in association with

Employment Tax

Guidance

It may be stating the obvious, but to be an employer signifies that there are employees (or at least one employee). Depending on the employee(s) earnings, the employer may have to make certain statutory deductions from employees’ salaries and wages. Statutory deductions include income tax, national insurance contributions (NIC), student loan deductions (SLD) and attachment of earnings orders (AEO). These statutory deductions are all made via the payroll. The collection system for tax and NIC is called pay as you earn (PAYE).

Registering with HMRC

Even though there may only be one employee, an employer needs to register with HMRC if the employee(s):

•
has another job
•
is receiving a pension (state or occupational)
•
has earnings equal to or more than the lower earnings limit (LEL) for national insurance
•
is receiving benefits in kind from the employer

Registration

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Vince Ashall

Payroll Consultant & Trainer at VA Payroll Services

Involved in payroll for more years than I care to remember! Initially in the NHS, where i oversaw the development of the NHS's bespoke payroll system (SPS Standard Payroll System), and latterly in the private sector. Served for 13 years as a MNT for a private sector defined benefit pension scheme. Have had articles published in payroll publications and and provide updates for various publishers. Fellow of the CIPP and gained a MSc in Payroll & Business Management in 2002. Now a self employed payroll and pensions consultant

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