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New Employers

Employer Obligations

When you become an employer you and you pay your employee(s) more than £102 per week, you are required by law to register with the HM Revenue and Customs as an employer and start a PAYE scheme before you make any payments to staff. They will send you an Employers Reference, used for submission of forms and an Accounts Office Reference, which you will need for making payments and accounts enquiries.

You are required to make sure that your employees are permitted to work in this country, by checking their documents and keeping copies (Click here for a list of documents required). If you later find out that your employee is not a legal worker, having made reasonable checks, will protect you from fines.

You are required to provide your employee with a contract stating the terms and conditions of their employment and payslips showing their gross pay and deductions.

You must get either Parts 2 and 3 of your employees P45, dated in the current tax year from their previous employer or ask your employee to fill in a starter form, giving all their personal details and a statement of employment.

You must pay your PAYE and NIC liability to HMRC on time, or you will risk interest being applied. Payment is due by the 19th (or 22nd if paying "electronically") of the month following the payroll month. For example, your liability for 6th April 2014 to 5th May 2014 (Month 1, 2014-15) will be due by 19th May 2014. If you are a small employer and you estimate that your total payment will be on average less that £1,500 per month, you can choose to make quarterly rather than monthly payments.

You must pay all employees their holiday entitlement, which is 5.6 weeks per year. So if they work 5 days a week, they will get 28 days a year, 4 days and they will get 22.4 days, etc.

You must submit an Employers Annual Declaration to HMRC no later than 19th April following the end of the tax year. You will incur fines of £100 per month for every month your return is late. You will also be obliged to provide your employees with a P60.

You must pay your employees at least the minimum wage and make sure their working hours do not exceed European laws.

You must make the required statutory payments to your employees, including Statutory Sick Pay (SSP) and Maternity Pay (SMP). Some of these expenses may be recoverable from HMRC.
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