Payroll (PAYE)

Following a limited company’s formation, if it has any employees at all, the company must register for the Pay As You Earn (PAYE) scheme with HMRC.

PAYE refers to the system whereby income tax and National Insurance (NI) contributions are deducted from an employee’s gross pay resulting in their weekly or monthly nett pay. The tax and NI contributions are then paid to HMRC. While other deductions may also be taken from an employee’s gross pay, such as pension contributions and child maintenance payments, these are not paid to HMRC.

121 Company Formation is an experienced accounting company that offers a comprehensive accountancy service including ensuring that you meet all your obligations as an employer.

What are my obligations as an employer?

  •   To apply to register for the PAYE scheme if your circumstances meet the requirements to do so
  •   To register for the PAYE scheme if this is the case
  •   To apply the PAYE scheme to all payments made to employees

To begin this procedure, we will send you an online PAYE application form that you should complete and return to us. After checking the form, we will then submit this to HMRC on your behalf so that you become registered as an employer. You will then receive a letter confirming registration has been successful and be allocated a unique PAYE reference number.

How does the PAYE scheme work?

Firstly, the company’s payroll must be set up either using 121 Company Formation’s accountancy service or by installing one of the commonly used payroll software packages.

When they join your employ, each employee will present you with a P45 from which information can be extracted to ensure that income tax payments and NI contributions are correctly calculated. If an employee does not have P45, then form P46 can be used instead.

Every week or month, depending on the frequency you pay your employees, their gross pay will be calculated from which tax and NI contributions are deducted to arrive at the employee’s net (i.e. take home) pay.

All deductions made from employees’ payments must then be paid to HMRC. This is due by the 19th of the following month (22nd if submitted electronically) but if the payroll is very small, then payments may be made quarterly.

At the end of every tax year (5th April), you must provide each employee with a P60 which gives a summary of their gross pay and all deductions made from this. If any of your employees received any taxable benefits throughout the year, then you must also produce a form P11 for them.

When an employee leaves your employment, you are required to provide them with a P45 which will show information such as their tax code and pay to date which will enable their new employer to calculate the correct deductions.

How can I access the 121 Company Formation accountancy services?

We currently have reduced prices on accountancy services for those companies that have used our company formation service.

We also offer this service to companies that are already incorporated.

On completion of our simple questionnaire, we will provide a quote for the best accountancy service package for your company.

Please email us at [email protected] for further details.

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