After you have incorporated your new private limited company you may need to employ some staff or at least pay a salary to the directors.  If this is the case you will need to operate Pay As You Earn (PAYE) deductions on their wages.  This is so that you withhold the correct amount of tax and National Insurance from their salaries, which you can pay over to HM Revenue and Customs (HMRC).

Once you know how many members of staff you will employ and when your first payroll date will be, you can complete the PAYE registration.  It is relatively simple, as you only need to provide basic information to HM Revenue & Customs, such as the personal details of directors.  However after these initial stages there are a number of things to consider.

You will be required to make monthly or quarterly returns to HMRC and pay them the relevant tax, National Insurance and student loan deductions. You may also make a claim for statutory maternity or sick pay.  You will also need to consider whether you need to make payments on a quarterly or monthly basis. At the end of the tax year some official forms need to be produced, some of which are filed with HMRC whilst others are handed out to employees.  This includes the P60, P35 and P14.

Where you have provided benefits to an employee, you will also need to deal with the tax consequences of doing so.  If an employee receives a benefit or is reimbursed for expenses, a P11D and P11D(b) return will need to be included and filed with HMRC.  In addition, Class 1A National Insurance Contributions may need to be paid depending on the type and value of the benefits provided.

Visit Wisteria Formations’ parent company Wisteria Chartered Accountants for more information about PAYE and National Insurance and becoming an employer.