UK payroll when under the threshold of registering as an employer

[Tony Pudding]

Hi everyone, im hoping someone can help here. I am currently running a small LTD company. It has been trading for 6 months and I havent taken a salary, all profits are being invested into future growth. I plan on taking dividends once we start making some real profit, but that’s not till year 2 at least. The thing is, i have come up to a point where i need to employ someone. This will be for 8 hours per week @ £12/hour. I am more than aware that this is under the threshold for me having to register as an employer and for that reason i don’t want to - i see it as another added complication.


My question is, how would I treat the payments to this employee. Not In terms of accounting, I understand that - the payment will simply CR bank and DR wages. There will be no NI or PAYE on such a small value. My query is, do I need to notify HMRC that, despite not being registered as an employer, i am paying an individual. in the same way that an RTI is submitted by larger firms? The payments will, afterall add to their income in other jobs they may/maynot have and therefore take the mover the personal allowance for the year

 

[Becky]

Welcome to the forum!

I am more than aware that this is under the threshold for me having to register as an employer and for that reason i don’t want to - i see it as another added complication.

The payments will, afterall add to their income in other jobs they may/maynot have and therefore take the mover the personal allowance for the year

You should be aware that if that person has another job then you do need to register for PAYE even if you are paying them less than £116 per week.

The alternative to taking on an employee is to pay a self-employed contractor. However the whole employment status topic (ie whether someone is an employee or self-employed) is not clear cut, it depends on the nature of the engagement between the two parties. If HMRC think you should be treating someone as an employee, then they can go after you for backdated PAYE/NICs on a grossed up basis plus penalties, so it's worth being very careful.

You can read more about employment status here: https://www.gov.uk/employment-status