Becoming an Employer – Things to Consider

Check the status of your workers
You need to establish the status of your workers. Are they employees or self employed?
HMRCs general rule is a worker is:

  • Employed if they work for you and don’t have the risks of running a business.
  • Self-employed if they’re in business on their own account and are responsible for the success or failure of their business.

Check that potential employees are eligible to work for you
Your employees should have a valid National Insurance number (if over 16) and be legally free
to work in the UK.
Visit: to find out how you can check that every potential employee is eligible to work in the UK and which identification you will need to see from them.

Check you do need to operate PAYE
If all of your employees are continuously paid less than the National Insurance Lower Earnings Limit (LEL) of £102 per
week or £442 per month, they do not have another job elsewhere, aren’t receiving any other benefits from the
employment and aren’t receiving a pension, you do not have to register as an employer with HMRC.

How to Register with HMRC as an Employer
Registering with HMRC as an employer is easy.
It can be done online: or by calling 0845 60 70 143.

Employer responsibilities
As an Employer, legally you must:

  • Give your employees a contract of employment.
  • Provide a payslip for your employees with every payment.
  • Provide your employees with a P60 at the end of the tax year and sumbit an end of year return (P35) to HMR online with these details.
  • Make PAYE payments to HMRC (these include the tax and national insurance deducted from your employees’ wages and NI contributions incurred as an employer).
  • Provide a P45 when an employee leaves your employment.
  • Provide statutory payments (such as sick pay (SSP) and maternity pay (SMP)) and holiday entitlements.

PAYE Payments Deadlines
Become familiar with the PAYE payment deadlines and ways you can pay.
(If your total PAYE each month is less than £1500, you can pay quarterly)

Payroll Calculations
Set up reliable payroll software to process your payroll or save yourself even more time by outsourcing to a payroll
HMRC provide their own free software for small businesses called Basic PAYE Tools which can be downloaded via

Regional Employer National Insurance Contributions (NICs) Holiday for New Businesses
If you start a new business before 5th September 2013 in certain areas of the UK, you could save up to £5,000 per
employee on your Employer National Insurance Contributions for the first 10 employees you take on during your first 12
months of trading.

Interested? Go to for more information.


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