If you are considering taking on an employee, you’ll need to set yourself as an employer. Here’s how to:
The New Employer Starter Pack from HMRC
The New Employer Starter Pack helps you through the process of taking on a new employee. It contains all of the forms, tables and other information you need in order to:
Record a new employee's details;
Calculate an employee's income tax, National Insurance contributions (NICs) and any student loan deductions so that you can make the correct deductions on payday;
Calculate the employer's NICs;
Keep a record of all payments and deductions.
It also contains the forms that you'll need if a new employee doesn't have a P45, or doesn't know their National Insurance number. Some forms and documents are included in paper format, but others will be in electronic format on the starter pack CD-Rom.
Enclosed with the starter pack will be your employer reference number. Make sure you keep this - you'll need to use it on official forms and correspondence.
How do I get my starter pack?
Call the HM Revenue & Customs (HMRC) New Employers Helpline on Tel 0845 60 70 143. As well as sending the starter pack, staff at the Helpline will be able to answer any immediate queries.
Employment documents from Net Lawman
You’ll need a number of documents and forms. Our pack, listed on the right, is an indispensible start for all new employers.
Who counts as an 'employee'?
Almost everyone who works for your business under a contract of service, even if this is just a verbal contract, normally counts as an employee. This means that you will have to deduct the appropriate income tax and National Insurance contributions (NICs). If your new employee has a student loan to be repaid, you may also need to make deductions for this when you pay them.
The following all count as employees for tax purposes:
Full and part-time workers;
Temporary and casual workers;
Directors or other office holders.
Of course, not all these types of employee will pay the same amounts of income tax and NICs - this depends on their individual circumstances. That's why it is essential to record full details of every employee from the start and to make sure you take the correct actions.
First steps in taking on a new employee
There's a certain amount of form-filling involved when you take on an employee. The aim of this initial paperwork is simply to make sure that you have a record of the new employee's details, and to keep HM Revenue & Customs (HMRC) informed.
What your employee needs to do
Your new employee must provide you with:
Their P45 - if they have one - this should have been provided by their previous employer;
Their National Insurance (NI) number.
Reminders
When you take on a new employee it is important that you comply with your legal requirements. There are other steps you can take to help your employee settle into their new role quickly and to help you maximise your investment in the employee:
Obtain your new employee's P45 and National Insurance number so you can set up payroll and ensure you make the correct deductions when pay day arrives. If a P45 is not available, complete a P46. If you have 50 or more employees you must file your new employee's P45 or P46 online from 6 April 2009. This requirement will be extended to all employers from 6 April 2011;
Plan your new employee's induction. Remember to include health, safety and environmental information and any other information the employee needs to comply with your company rules and policies;
A contract of employment exists as soon as an employee starts work. However, you are legally obliged to provide an employee with a statement of employment within two months of their start date;
Check whether you are required to take out employer's liability insurance;
Prepare a suitable workspace for the new employee;
Introduce the employee to other members of staff;
Plan ongoing support and training so that the employee can settle in quickly.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
