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Setting up a payroll

Produced by Tolley in association with
Employment Tax
Guidance

Setting up a payroll

Produced by Tolley in association with
Employment Tax
Guidance
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It may be stating the obvious, but to be an employer signifies that there are employees (or at least one employee). Depending on the employee(s) earnings, the employer may have to make certain statutory deductions from salaries and wages. Statutory deductions include income tax, national insurance contributions (NIC), student loan deductions (SLD) and attachment of earnings orders (AEO). These statutory deductions are all made via the payroll. The collection system for tax and NIC is called pay as you earn (PAYE).

Registering with HMRC

Even though there may only be one employee, an employer needs to register with HMRC if the employee(s):

  1. •

    has another job

  2. •

    is receiving a pension (state or occupational)

  3. •

    has earnings equal to or more than the lower earnings limit (LEL) for national insurance

  4. •

    is receiving benefits in kind from the employer

Registration needs to be undertaken before the first payday. The registration process can take up to 30 days and registration cannot be made more than two months before employees are first paid. The timescale for registering

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Ian Holloway
Ian Holloway

Payroll and Reward Consultant , Employment Tax, Personal Tax


Ian has been in the payroll profession for over 30 years, processing payrolls from all sectors, large and small. He moved from hands-on exposure in 2011 to become involved in educating the profession. His wide-ranging experience and up-to-date knowledge ensures he can impart this information to UK professionals through course material, social media, newsletters and face-to-face presentations.However, educating the profession cannot be achieved without knowing how the profession works on a day-to-day basis and involvement with hands-on administration is essential. So, today, Ian operates as a consultant and advisor and is involved with a vital aspect of the payroll and reward environment, that of working with the software that does a lot of the hard work for the profession.The return to being involved in a hands-on environment has not stopped his desire to inform, educate and train the UK payroll profession. Indeed, this is now better-achieved, as he can draw on real processing situations.Ian approaches education and communication very much from the perspective of how this will impact the software, the employer and the worker. So, whilst the legislation is vital, compliance and effective communication are paramount.Ian is Companion of the Institute for Certified Bookkeepers (ICB), committee member of the British Computer Society (BCS), a committee members of the ICAEW’s Tax Faculty and a Fellow member of the Chartered Institute of Payroll Professionals (CIPP).

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