Why do I need to know if I am an employer?
How do I run my payroll?
Using a payroll provider
What does 'running a payroll' myself involve?
How can this site help me run my payroll?
I have decided to run my own payroll. Where do I start?
Becoming an employer means that you have various responsibilities.
First things first: it is important to be sure that the personal assistant you are taking on definitely counts as an employee, rather than self-employed. See our tax employment status section for help on how to decide whether your personal assistant is employed or self-employed. This is important because you will have certain responsibilities as an employer that you would not have if your personal assistant is self-employed.
As an employer, one of the main things you will need to do is run a payroll so that you can pay your personal assistant (employee). You can find out what we mean by running a payroll and the help you can get from this site in running your payroll.
HMRC also have lots of general help for new employers, including webinars, e-learning, emails and videos on employing people – see our getting more help section for further details.
For more information on the areas of employment law you will also need to think about if you are an employer, see our employment law section.
How you run your payroll is up to you. You can choose to use an accountant or payroll bureau to do the work for you but you may have to pay for their services. You can find out more about using a payroll provider by clicking on the link below.
On the other hand, you may want to try and do it yourself to save money or because you fancy the challenge. Running a payroll may seem like a daunting prospect, but this website will hopefully provide you with sufficient background knowledge and guidance to help you feel confident in what you need to do.
Payroll is an essential part of employing someone so it is important that it is done right. If you are hesitant to take on the responsibility or paperwork that goes with operating a payroll, or are anxious about getting things wrong then that is totally understandable.
Your Independent Living adviser or Local Authority may be able to advise you where else you can get help to deal with your payroll. There’s a variety of support available ranging from advice and information to practical help.
Some social services departments will even be able to point you in the direction of free in-house payroll support services, or a local provider that they have outsourced their support to (although often there will be a charge).
If you can afford to pay an independent payroll provider to help you run your payroll, then you may choose to do this because of the time you will save by reducing admin/paperwork, as they can look after all or some of the necessary calculations, reporting and record keeping. The payroll service you receive will depend on the provider that is chosen and the contract that is agreed with them.
There are payroll providers of all shapes and sizes out there and you should choose who you want to assist you carefully.
When talking with an accountant, payroll bureau or other provider, you should be clear about what level of support you will need – e.g. do you need them to provide payslips to employees, make payments to HMRC on your behalf or deal with payroll related queries from your employees?
When deciding between payroll providers, you should do your research and think about:
- Whether they provide a simple service or a more detailed/managed service?
- Whether they are experienced with your type and size of business
- Their costs – both ongoing costs and set up costs
- Whether they are recognised by your local authority or a member of a professional institute
- If their payroll software is endorsed by HMRC
- The terms of their contract – e.g. will you be reimbursed if it is clear that they are at fault for failing to do something but you get charged a penalty by HMRC? Are you clear on what tasks you will do and they will do?
It is important that you are aware that even if you use a payroll provider, you are ultimately still responsible for ensuring that your obligations are met, including checking and recording employee information, calculating and recording any additions, reporting your payroll information and making your payments to HMRC.
The following are some of the main payroll tasks that you may need to carry out. You can click on the links to find out more.
- Register as an employer with HM Revenue and Customs (HMRC).
- Collect information about your new employee, e.g. National Insurance number, tax code.
- Operate Pay As You Earn (PAYE) to collect income tax and National Insurance contributions (NIC) on your employee’s pay.
- Potentially deal with benefits and/or expenses and auto-enrolment.
- Send details of the payments made to your employee to HMRC at regular intervals.
- Pay any employer National Insurance contributions.
- Pay the tax and National Insurance to HMRC at the correct time.
- Pay statutory payments where they apply (such as Statutory Sick Pay, Statutory Maternity Pay and Statutory Paternity Pay).
- Collect Student Loan repayments and/or other types of deductions from pay, for example those ordered by a court.
- Give your employee a payslip with each payment.
- Give your employee an annual statement on form P60.
- Take any action required at the end of the tax year and when an employee leaves.
- Keep good records of employees and the payments you make.
There are different ways to run your payroll and do all of the above. The main way is electronically (or 'online'). HMRC strongly recommend you use an electronic payroll system as it is quick and easy and you are much less likely to make mistakes. In fact for many employers, it is obligatory to use an electronic system.
There are certain groups however, such as people who take on personal assistants (called care and support employers by HMRC), who may still use a manual system and file information on paper. We explain the difference between the two ways of sending information to HMRC in our filing section.
This site explains, step by step, what you need to do to run your payroll, either manually or electronically and provides tools to help you.
For example, if you choose to do your payroll ‘online’, we explain the process in this section of the website and guide you to some free payroll software that is available, which sends the necessary information to HMRC automatically.
We have also produced a free payslip tool that can be used with the free HMRC payroll software to produce payslips for your employee, as the HMRC software does not have this function.
You can use the menu on the right to find about all of the different parts of running a payroll. Each section will guide you through the steps you need to take.
Once you have checked that your personal assistant is definitely an employee rather than self-employed (see our tax employment status section for help with this) then the first step to getting your payroll up and running is to register with HMRC as an employer. Have a look at our section on registering to find out how to do this.