Registering with HMRC as a New Employer
When a business takes on its first employee, it will usually need to register with HM Revenue & Customs (HMRC) as a new employer. This applies even if the business has only one employee, for example if the sole director of a limited company is an employee of the company and has no other employees.
New employers must register in advance of the business's first payday, providing information about the business and its employees. Once registered, it is possible to set up a payroll system, pay employees and make returns and payments to HMRC.
This factsheet explains who needs to register as an employer, when they need to register, and how to register, including the information that must be supplied to HMRC.
Who needs to register as an employer?
Anyone who takes on an employee must register as an employer, provided that one or more of the following circumstances apply:
The employee is being paid at or above the PAYE (Pay As You Earn) threshold (£12,500 per year in 2020/21) or the National Insurance lower earnings limit (£6,240 per year in 2020/21).
The employee is being provided with employee benefits, for example expenses or a company car.
The employee already has another job or is receiving a state, company or occupational pension.
Anyone who hires sub-contractors for construction work must register as an employer in order to join the Construction Industry Scheme.
When to register Registration as an employer must normally be completed in advance of the first payday. Although HMRC does not stipulate a set timeframe for registration, it is important to allow plenty of time because it can take up to five working days to receive a PAYE reference number, which is needed to enrol with PAYE Online and report payroll information to HMRC.
However, it is not possible to register more than two months ahead of the first payday. Registrations will be cancelled automatically if no payroll information is reported to HMRC within this period.
How to register Most new employers can complete an online form to register with HMRC. However, some employers whose business structures or situations are unusual must register by telephone.
For example, the following types of business cannot register using the online service and must register by phone:
Limited liability partnerships with 11 or more partners.
Limited companies with 10 or more directors.
Most offshore employers who are not liable for UK National Insurance.
Information that must be provided In order to register all new employers must provide:
Business name (including partners' names or company name if relevant).
Contact e-mail address and telephone number.
Name and address for correspondence.
Date of first payday or first payment of expenses or benefits.
Unique taxpayer reference (UTR) (for the employer as an individual, or for the partnership or limited company as appropriate).
Number of employees employed or expected to be employed (including directors).
Confirmation of whether the business will engage any sub-contractors in the construction industry.
A statement of whether the employer will be acting as a troncmaster (ie whether they will be responsible for distributing customer tips to employees and reporting these amounts to HMRC).
Where applicable, it will also be necessary to provide:
Limited company or LLP registration number.
Address of registered office.
Names of all company directors or partners.
NI numbers of all directors or partners.
Next steps Once registered, employers are required to deduct PAYE tax and National Insurance contributions (NICs) from their employees' pay, pass these deductions to HMRC, maintain accurate payroll records and submit payroll information to HMRC online on or before the date on which they pay their employees.
Some employers run payroll in-house, and others choose to outsource it. For employers who choose to run their payroll in-house there are various software packages available.
Contact Ashored for help and support with your payroll.