Taking on a new employee comes with important responsibilities; first and foremost, to extract the right information from them at the outset, and then to make sure that they are set up correctly on your payroll software, as well as being registered accordingly with HM Revenue & Customs (HMRC).
Getting these crucial first steps right will ensure that you are operating compliantly, but also that the individual in question is paying the correct amount of tax.
With concerns over the number of employees being put onto the wrong tax code, HMRC is encouraging employers to be more efficient when it comes to providing information about new starters.
HMRC suggest the following:
- obtaining personal details and entering them accurately: the best way to make sure employers are submitting the correct details about the employee, is by making sure the information exactly matches the official documents.
- be sure to use the digital ‘starter checklist’ where the employee does not, or cannot, provide a P45.
- use the right tax code with starter declaration code C: you should not use any tax code other than BR or 0T with starter declaration code C.
P45 vs Starter checklist
If your new employee brings a P45 from their previous employment, this may give you most of the information that you require.
However, it could be the case that the employee does not have access to a P45 or, otherwise, that circumstances have changed since the P45 was originally issued.
In both of the above instances, asking your new employee to complete the starter checklist will ensure that you are able to collate the data – i.e., National Insurance number and tax code applied in their previous job – that you need.
The new starter checklist will enable you to determine what, if any, student loan deductions need to be made and what tax code your employee should be allocated ahead of their first payday.
The details from the new starter checklist are submitted to HMRC via RTI on your Full Payment Submission the first time they are paid. Submitting the correct information to HMRC from the starter checklist helps then to ensure any corrections to tax codes are issued promptly.
How can GH Payscheme help?
At GH Payscheme, we operate a BACS-approved payroll bureau, and pay advice service, that supports businesses in Bedfordshire, Cambridgeshire, Hertfordshire, and throughout the UK.
Running your payroll compliantly and ensuring that your employees and HMRC are paid accurately and on time need not be a concern. We can process your payroll, no matter your headcount, and ensure your PAYE liabilities are met.