UK employers have a legal obligation to deduct Income Tax and National Insurance contributions from employee wages. Employee tax codes and the National Insurance Lower Earnings Limit determine the amount deducted from those wages. Businesses must also pay Employer’s Class 1 National Insurance contributions when an employee earns wages above their allocated threshold. Employers can register for PAYE (Pay As You Earn) up to 4 weeks in advance of the first scheduled payment date.
- Skill level:
- Moderately Easy
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Things you need
- HMRC website
Visit Her Majesty’s Revenue and Customers (HMRC) Online Tax Registration Service website (see Resources below for link). Choose the “Organisation” option to clarify your position as an employer, limited company, partnership or trust.
Review the list of services when the subsequent page appears and select “PAYE for Employers” by highlighting the check field within the list provided. Click the “Next” button to proceed.
Read the terms and conditions provided by clicking on the “View Terms and Conditions” hyperlink. Review the information carefully to establish a firm understanding of your obligations and responsibilities. Confirm that you have read the terms and conditions by highlighting the check field provided. Click “Next” to continue.
Add your personal information using the field provided. Supply your full name and email address before clicking on “Next” to continue. Follow the onscreen prompt and choose a password. Ensure your password contains 8 to 12 characters including a minimum of one letter and one number. Click “Next” again.
Write down your User ID as soon as it appears on the following screen. Keep a note of your User ID and password in a safe place and use them every time you log in to the HMRC Online Services website. Click the “Next” button to enrol for the service.
Enter the Employer’s PAYE Reference and your Accounts Office Reference supplied by the HMRC during your initial employer registration. Visit the HMRC website to register as an employer if you have not done so already.
Check your email account and write down the activation PIN supplied by HMRC. Visit the HMRC Online Services website, select the “Log In” option and enter your User ID and password. Enter your activation PIN to validate your new PAYE account and to complete your registration. Remember that activation codes are only valid for 28 days.
Revisit the HMRC Online Services page to add employee information to your account. Use the HMRC website in conjunction with your current payroll system software and remember to add new PAYE employees as soon as they are hired.
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