Registering with HMRC

You only need to register as an employer if there is tax or National Insurance due on the amounts you are paying. This will depend on a number of factors:

If an employed worker earns more that the income tax and National Insurance thresholds, you will need to register as an employer. (These limits are: for income tax – £124 per week; and for National Insurance, the Lower Earnings Limit is £97 per week; both figures are for 2010/11).

Even if your employees earn less than this, you may still need to register as an employer for PAYE: 

• if one of your employees has another job, pension or taxable benefit which uses up all or part of their tax free personal allowance. This would mean that they would not have enough tax free personal allowance left to cover what you pay them and so income tax would have to be deducted 
• if you provide the employee with a taxable benefit, such as a company car. The benefit must be taken into account when you work out if there is tax due

You can register as an employer up to four weeks before the first pay day. This gives you time to set up your payroll system.