Reply to: Worth registering my new Ltd Co for PAYE?

[GazCol]

Not a contradiction - the helpline would have been agreeing that the co. did not need to register for PAYE and that page is on how to operate PAYE, so it doesn't apply.

Basically what GazCol and UKCA said (except the piece about paying family members to clean your office ).

I'd just like to distance myself from the family members comment... Haha. Although I think what UKCA meant was if you have employees that are paid above the LEL threshold in another job and are employed by you, you have to also run a PAYE scheme, even if all employees are paid below the LEL threshold. At least that's what I hope he meant...

[Contreras]

Wow, so you had an argument with the person on the Employer Helpline and got them to contradict what HMRC's written guidance says.

Good luck with that one but I can't help but think that it will come back and bite you.

Not a contradiction - the helpline would have been agreeing that the co. did not need to register for PAYE and that page is on how to operate PAYE, so it doesn't apply.

Basically what GazCol and UKCA said (except the piece about paying family members to clean your office ).

[GazCol]

Wow, so you had an argument with the person on the Employer Helpline and got them to contradict what HMRC's written guidance says.

Good luck with that one but I can't help but think that it will come back and bite you.

To be fair, the written guidance Craig quoted is only true if a PAYE scheme is already in place.

If you're a new company and you have no employees earning above the LEL threshold, you do not have to be PAYE registered and as a result, do not have to do RTI submissions.

If you're an existing company, currently have no employees earning above the LEL threshold, but have previously, you need to deregister from PAYE otherwise you have to do RTI submissions.

The HMRC guidance quoted is in respect to companies that have employees paid above the LEL threshold and employees paid under the threshold. As these companies have to be PAYE registered submissions have to be done for all employees.

Further information here.

That's the biggest problem with HMRC's web
page. The guidance doesn't make sense if you look at one page in isolation. You would think, from Craig's link that it was black and white. However that is only advice for current PAYE scheme operators.

[Wanderer]

Extract from here: HM Revenue & Customs: What to report

"You need to report the payment details of all employees you pay, no matter how much you pay them - even those earning below the Lower Earnings Limit (LEL), or those paid just once a year."

I have had this argument out with the Employer Helpline which confirmed that if all you employees are earning less than the LEL limit you do not need a PAYE scheme in place or report under RTI (assuming you hold signed P46's for all staff!).

Wow, so you had an argument with the person on the Employer Helpline and got them to contradict what HMRC's written guidance says.

Good luck with that one but I can't help but think that it will come back and bite you.

[GazCol]

I see your point now.

One benefit of having a PAYE scheme allows you to sort out your tax during the tax year rather than waiting until the self-assessment is submitted. He will have paid tax on his prior earnings and will get a refund of this if staying below the personal allowance – this will come quicker if he uses a PAYE scheme.

If he is going to claim for certain expenses then these will need to be reported on a P11d and a PAYE scheme will need to be opened in order to complete this.

Craig

He can claim the tax rebate now Craig. I hope you don't run payroll for your practice!

[northernladuk]

I have had this argument out with the Employer Helpline which confirmed that if all you employees are earning less than the LEL limit you do not need a PAYE scheme in place or report under RTI (assuming you hold signed P46's for all staff!).

It takes just 1 employee earning above the LEL to bring all the other employees under RTI including the £5 a week you pay to your son/daughter for cleaning your office (that's if you employ family members in your ltd co).

I am so glad you are not my accountant... if you are one at all.

[john@UKCA]

Extract from here: HM Revenue & Customs: What to report

"You need to report the payment details of all employees you pay, no matter how much you pay them - even those earning below the Lower Earnings Limit (LEL), or those paid just once a year."

I have had this argument out with the Employer Helpline which confirmed that if all you employees are earning less than the LEL limit you do not need a PAYE scheme in place or report under RTI (assuming you hold signed P46's for all staff!).

It takes just 1 employee earning above the LEL to bring all the other employees under RTI including the £5 a week you pay to your son/daughter for cleaning your office (that's if you employ family members in your ltd co).

[Craig at Nixon Williams]

I see your point now.

One benefit of having a PAYE scheme allows you to sort out your tax during the tax year rather than waiting until the self-assessment is submitted. He will have paid tax on his prior earnings and will get a refund of this if staying below the personal allowance – this will come quicker if he uses a PAYE scheme.

If he is going to claim for certain expenses then these will need to be reported on a P11d and a PAYE scheme will need to be opened in order to complete this.

Craig

[GazCol]

Extract from here: HM Revenue & Customs: What to report

"You need to report the payment details of all employees you pay, no matter how much you pay them - even those earning below the Lower Earnings Limit (LEL), or those paid just once a year."

That's only if a PAYE scheme is in place. I.e. if one employee is above LEL you must report on all employees.

I'm posting from my phone at the moment but I will link to HMRC when on an easier device to post from.

[TheCyclingProgrammer]

Extract from here: HM Revenue & Customs: What to report

"You need to report the payment details of all employees you pay, no matter how much you pay them - even those earning below the Lower Earnings Limit (LEL), or those paid just once a year."

It does say that, but surely that only applies if you're registered for PAYE in the first place?

I think GazCol's point was that in some situations you don't need to register for PAYE, in which case would the above even apply? HMRC's guidance is - as ever - as clear as mud on this.

Over here, it says this:

Before you pay your first employee for the first time, you must check whether you need to operate PAYE. The guide 'How to register as an employer' tells you when you need to register and how to register.

HM Revenue & Customs: How to register as an employer

As soon as you first employ someone, you will need to register as an employer with HMRC if any of the following is true:
you're paying them at or above the PAYE threshold
you're paying them at or above the National Insurance Lower Earnings Limit
the employee already has another job
they are receiving a state, company or occupational pension
you're providing them with employee benefits

My interpretation is: if you need to register for PAYE due to any of the above reasons, then you need to report all earnings, including those under the LEL (like you said). However if none of the above apply, you don't even have to register for PAYE in the first place, in which case there is nothing to report.

[rm55]

Thanks all, I'm trying to get as much info as I can being new to all this.

You are going to get an accountant aren't you?

Yes.... but; the contract I'm starting is only for 3 months and will bring in just over £9000 in that time. So I'm trying to keep things as simple as possible. My "plan" such as it is, over those 3 months is to obviously record money received, and any business expenses so I can pass this to an accountant to do the year end stuff when required (I've downloaded the spreadsheet from SJD Accountings website).

But other than doing a flat rate VAT return online (I think I can handle this myself), I don't know if I'll need an accountant at least until next year when I find out if my contract will be extended or if I start a new role. This was why I asked about PAYE as for that I think I'd need to get an accountant in from the start and with the money I'll be earning to begin with I'd prefer to avoid this if possible (no offence to any accountants reading this!)

[TheCyclingProgrammer]

It wouldn't cost him anything in NI - the NI threshold per employment not overall.

Craig

Then I apologise. You learn something new every day. I was stupid to think HMRC would keep things simple.

[Craig at Nixon Williams]

That's not right, an RTI submission only needs to be done if you're PAYE registered and you do not have to be PAYE registered if all employees earn below the LEL threshold.

Extract from here: HM Revenue & Customs: What to report

"You need to report the payment details of all employees you pay, no matter how much you pay them - even those earning below the Lower Earnings Limit (LEL), or those paid just once a year."

[GazCol]

Yes, under the RTI rules each time an employee is paid a submission needs to me made to HMRC.

If he is doing it himself then he could wait until March and pay it all in one go so that the number of submissions is kept to a minimum. I presume that he would be registering next year anyway!

Craig

That's not right, an RTI submission only needs to be done if you're PAYE registered and you do not have to be PAYE registered if all employees earn below the LEL threshold.

[Craig at Nixon Williams]

You said he could pay himself another £2276 without incurring any tax. Thats not true - it would cost him nearly £450 in NI contributions (employee and employer). Even though there is CT relief on employer contributions, it would still be costing him more money.

It wouldn't cost him anything in NI - the NI threshold per employment not overall.

Craig