If you’re about to take on your first members of staff, then it’s absolutely vital that you understand your role and responsibilities as an employer. There’s a lot of law surrounding employment – both general and taxation-related so the Sunny team have put together this handy guide to what’s expected of you as an employer; helping you to establish a happy new workforce within your business.

Paying your employees

Running payroll

So you’ve got your first member of staff on the payroll - now what?

In the UK, businesses employing staff operate on a system called PAYE - or Pay As You Earn – which makes employers responsible for deducting tax from their employees’ wages. You will need to:

  • Record your employees’ pay including wages and commission
  • Calculate deductions from their pay including tax and National Insurance
  • Work out your employer’s National Insurance contributions (NICs) for their earnings over £157 per week
  • Produce payslips for each member of staff
  • Report all pay and deductions to HMRC in your Full Payment Submission on or before payday

An easy way to keep track of all this is to have your Sunny accountant set your business up on a simple payroll system. We can then file your monthly returns, provide payslips for you, and can also let you know exactly how much you are due to pay your staff and how much needs to be sent to HMRC.

You’ll want to establish a set monthly pay day and agree an annual salary before tax with each of your employees.

We can then input the pre-agreed salary for each employee into your payroll system. If you want to change the amount, you’ll need to let us know at least 48 hours before you make the payment. This keeps everything running smoothly on both ends; with your employees receiving their wages as and when they should.

Setting wages

Deciding how much you are going to pay new additions to your team is up to your business. However there are certain restrictions you should be aware of beforehand.

In the UK, the minimum you are allowed to pay an employee depends on their age bracket and the type of employment you are offering.

For 2018/19 the minimum wage rates are as follows:

Age band

25 and over

21 to 24

18 to 20

Under 18

Apprentice

National Living/Minimum Wage

£7.83 

£7.38

£5.90

£4.20

£3.70

You are legally required to pay at least the minimum wage. Not doing so is a criminal offence. If you are found to be paying below the minimum wage you will be investigated by HMRC and fined.

Paying HMRC

Paying your employees’ tax

Since it is your responsibility to make sure HMRC gets the tax owed to them by your staff, should they not get the correct amount, the taxman will after you for it. If this happens, you will need to prove you followed PAYE rules or face a potential penalty on the missing tax payments plus pay the missing tax over itself as well.

That’s why we will send you a summary each month of exactly how much you need to pay your staff after we have calculated the tax they owe to HMRC. You will then be able to send their tax deductions to HMRC using the bank details and reference number we provide you.

Payments to HMRC are due by the 22nd of each month the payroll quarter ends. These dates are: the 5th July, 5th October, 5th January, and the 5th April.

Alternatively, you can choose to pay HMRC each month when you pay your staff.

Employer’s NICs

Unfortunately, you don’t just have to collect your staff’s tax and pay it over. As an employer, you are required to pay Employer’s National Insurance at a rate of 13.8% on money you pay each staff member over £8,424 a year.

More fortunately, however, the government recently introduced the Employment Allowance. This relief removes the first £3,000 of your bill. We’ll apply this automatically when working how much you owe.

While Employer’s NICs are calculated using your employee’s salary this tax is all on you. This should not affect your staff’s take-home pay at all.

Your employees’ rights

Leave entitlements

You must give any staff you hire at least the statutory minimum amount of holiday each year. This is usually 28 days a year including bank holidays but, of course, there will be some roles in which employees will be required to work on bank holidays.

If your employees are off work with an illness or injury they are entitled to statutory sick pay once they have been off work more than four days. This pay is no longer reimbursed by the government and so will need to be paid by your company.

During your time as an employer, it is likely you will have a member of staff go on maternity or paternity leave. You are required to pay them while they are away. The government will reimburse you for the statutory minimum and any extra wages will come from you. 

Pension autoenrollment

Finally, there is now a requirement for all employers to provide a pension and automatically enrol their workers onto it. Penalties for noncompliance start at £400 and only increase so it is extremely important that you get this right.

This is another responsibility that we will be able to help with. Speak to your Sunny accountant about autoenrollment and keeping your company on the Pensions Regulator’s good side.

Let us help

Becoming an employer is never easy, but Sunny is here to help lighten your load. Give us a call today on 01623 559 362 or email us on [email protected]


For a free chat on how we can help you, please complete the contact form below and we will be in touch.