Registering as an employer with HMRC is one of the first things you might need to do when you start employing staff or pay subcontractors to do construction work. Even if you only employ yourself (as a company director, for example), you will still have to register if certain conditions are met.
In this blog, we outline all of the essential information you need to know about registering as an employer, including when registration is required, how and when to register, the information you will need to file with HMRC, and your payroll obligations after registration.
Do I need to register as an employer?
Whether you operate as a sole trader, company, or partnership, you will need to register as an employer with HMRC and set up Pay As You Earn (PAYE) if your business does any of the following:
- pays at least one employee (or company director) £123 or more per week (£533 per month; £6,396 per year) – this is the Lower Earnings Limit for National Insurance contributions (NIC)
- employs anyone who receives a pension
- employs anyone who has another job
- provides expenses or benefits to employees or company directors
- uses subcontractors to do construction work under the Construction Industry Scheme (CIS), or reclaims CIS deductions taken from payments
If you employ people but do not meet the requirements for registering as an employer, you will still need to keep records detailing what you pay them.
How do I register as an employer?
The vast majority of employers can register and set up PAYE online. To do so, simply sign in to (or create) your HMRC business tax account, select the option to register for additional taxes, choose ‘PAYE for Employers’, and complete the steps as prompted on-screen.
HMRC provides further guidance on using your HMRC business tax account, including creating a new account and registering for additional taxes.
Depending on which type of business you are registering as an employer, HMRC will ask you to supply the following information, where applicable:
- registered company name or business name
- trading name, if this is different
- registered office address (for a company) or business address
- nature of the business (e.g. plumber, restaurant, investment business, accountant)
- Unique Taxpayer Reference (UTR)
- company registration number
- name and National Insurance number of at least one company director – unless your company is not based in the UK, or any directors have been told by the Department for Work and Pensions (DWP) that they do not qualify for a number
- contact name, telephone number, and email address that HMRC can use to contact the business about PAYE
- date of the first payday, or the first date you made payments of expenses or provided benefits to employees
- number of people you employ or expect to employ in the current tax year
- whether you will be engaging any subcontractors in the construction industry in the current tax year
- whether you will be operating an occupational pension scheme
If you have an accountant or tax agent, you can ask them to register your business as an employer and deal with HMRC on your behalf. Your agent will have their own online account, but you will still need to provide them with all of the required information to complete your employer registration.
Registering as an employer by phone
You will need to register as an employer by phone (rather than online) in the following circumstances:
- the business is a limited company with 10 or more directors
- none of the company directors have a UK National Insurance number
- the company is an offshore employer outside the European Economic Area (EEA) that does not pay UK National Insurance
- your company will pay out non-cash incentive awards over the next 2 months
- the business is a partnership or LLP with 11 or more partners
- you are an individual employing a carer or support worker in your home
- the business is a charity or committee-run organisation
What happens after registration?
Around 5-10 working days after registering as an employer, you will receive a confirmation letter from HMRC. This will contain your employer PAYE reference and Accounts Office reference.
You will need these references to complete payroll-related tasks, such as sending payroll information to HMRC, paying PAYE tax and NIC, and issuing payslips to your employees.
To carry out payroll tasks, your business must be enrolled for PAYE Online. You’ll be automatically enrolled if you register as an employer online, but you will need to enrol separately for HMRC’s PAYE Online service if you register by phone.
As an employer, you will use PAYE Online to:
- check how much PAYE tax and NIC your business owes
- pay your PAYE bill
- view your payment history
- access tax codes and notices about your directors and employees
- appeal penalties
- get late reporting and late payment alerts from HMRC
- send expenses and benefits forms
A small number of employers are exempt from online filing and permitted to complete payroll tasks on paper. You may be exempt if you are:
- prohibited from using a computer on religious grounds
- receiving care or support services for yourself or a family member
- unable to send reports electronically because you are disabled, elderly, or can’t access the internet
HMRC’s guidance on exemption from online payroll reporting provides more information.
Filing and reporting requirements for employers
When you register as an employer, you will need to complete a number of payroll tasks each tax month (a tax month runs from the 6th of one month to the 5th of the next).
On or before each payday, you must carry out the following tasks using your payroll software:
- record your employees’ pay
- calculate deductions from your employees’ pay – Income Tax, National Insurance contributions, student loan repayments, pension contributions, Payroll Giving donations, and child maintenance payments
- calculate your employer’s National Insurance liability on employees’ earnings above £190/week
- create payslips for your employees
- report employees’ pay and deductions to HMRC in a Full Payment Submission (FPS)
If you do not pay any of your employees in a tax month, you must tell HMRC by sending an Employer Payment Summary (EPS) rather than an FPS.
In the following tax month, you can:
- view what you owe from your Full Payment Submission – available online in your HMRC business tax account from the 12th
- claim reductions on what you owe (e.g. statutory pay, Employment Allowance, CIS deductions) by sending an EPS by the 19th of that month
- view what you owe in your HMRC online account within 2 days (or by the 14th, if you sent the EPS before the 11th)
- pay what you owe by the 22nd (or the 19th, if you’re paying by post)
If you normally pay less than £1,500/month, HMRC may allow you to pay quarterly rather than monthly.
Do you have any questions?
We hope that this post has shed some light on registering as an employer, including the circumstances in which registration is required, how and when to register with HMRC, the information you need to provide, and your payroll obligations after registration.
If you have any questions about this topic – or limited companies in general – please get in touch or leave a comment below.