When forming a new company, you may want to pay your directors or hire employees; this will require you to operate PAYE and be registered as an employer with HM Revenue & Customs.

As an Employer, you are responsible for registering with HM revenue & Customs and deducting the correct tax and national insurance and then paying this on to HMRC, either  monthly or quarterly (depending upon the level of taxes due for payment).

Pay as You Earn (PAYE) is the method by which income tax is collected by employers on employee salary payments.  The amount withheld from each salary is dependent on the employees’ tax allowances, reliefs and exemptions as well as where they fall into the tax table (for example shown in the table below)

Table showing the tax rate (%) for different amounts and types of income

	2009-10
Basic Rate	20% from 1 – £37,400
Higher Rate	40% for over £37,400
Rate on non-dividend savings income	10% up to £2,440 20% up to basic rate limit 40% thereafter
Rate on dividend income	10% up to basic rate 32.5% above basic rate

Details of personal allowances are not included on this table and this table should not be relied upon for the purpose of calculating paye tax.

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.

During the process of forming your company with Wisteria Formations, you can select to appoint Wisteria to act on your behalf.  They can deal with monthly payrolls, completion of employers annual returns, production of P11D’s and specific payroll advice regarding the most efficient way to make payments to your employees.

To complete your company registration begin here: http://www.wisteriaformations.co.uk

Or visit the links below for more information about Wisteria Chartered Accountants and their services.

PAYE: http://www.wisteria.co.uk/?q=paying-paye-ni

Becoming an employer: http://www.wisteria.co.uk/?q=employment