Employing your first part time employee

[Dick Dastardly]

I work for myself as a consultant (Ltd co) but I need to sub out couple of hours work to a family member. What's the easiest way to go about this? Do I have to go down the whole PAYE route even though the amount is going to be in the tens of pounds each month?

[Steve H]

Dick, I am a partner in a company and so not a director and my accountant tol me that if teh annual salary is below the minimum you do not need to submit any returns. I have a P/T staff member who gets well below the minimum and whilst I do keep a P11 for my own records, I simply decuct the annual salary from my profit and loss at year end.

I am sure someone wiser than me will be along in a mo to either agree (I hope) or correct
Steve

[Eric Mc]

Steve H said:

Dick, I am a partner in a company and so not a director and my accountant tol me that if teh annual salary is below the minimum you do not need to submit any returns. I have a P/T staff member who gets well below the minimum and whilst I do keep a P11 for my own records, I simply decuct the annual salary from my profit and loss at year end.

I am sure someone wiser than me will be along in a mo to either agree (I hope) or correct
Steve

You cannot be a "partner" in a "company" unless you are using the term "company" in a very loose way and what you really mean is that you are a partner in a "partnership". You go on to say that you are not a "director" which suggests that you really are a partner in a partnership.

Regarding part time staff - they are just as much part of the PAYE system as full time staff.

If the OP is running his own limited company, he should already have set up the company as a PAYE employer - whether he pays himself a salary or not. PAYE is not just about wages but also covers all sorts of statutory declarations that need to be made in respect of directors over and above mere wages and salaries (benefits in kind details, expenses claimed and paid etc).

If the company has been set up for PAYE, then ALL wages paid to directors and staff need to be returned and accounted for - even if no PAYE or NIC was payable on the wages paid in the year. There are special provisions for declaring and returning low paid staff - so they are not absolved from being included in the annual employer returns.

[Dick Dastardly]

Thanks guys. I have set myself up for PAYE so had better give my accountants a call on Monday and let them know someone else will be joining me.

[Steve H]

Eric Mc said:

Steve H said:

Dick, I am a partner in a company and so not a director and my accountant tol me that if teh annual salary is below the minimum you do not need to submit any returns. I have a P/T staff member who gets well below the minimum and whilst I do keep a P11 for my own records, I simply decuct the annual salary from my profit and loss at year end.

I am sure someone wiser than me will be along in a mo to either agree (I hope) or correct
Steve

You cannot be a "partner" in a "company" unless you are using the term "company" in a very loose way and what you really mean is that you are a partner in a "partnership". You go on to say that you are not a "director" which suggests that you really are a partner in a partnership.

Regarding part time staff - they are just as much part of the PAYE system as full time staff.

If the OP is running his own limited company, he should already have set up the company as a PAYE employer - whether he pays himself a salary or not. PAYE is not just about wages but also covers all sorts of statutory declarations that need to be made in respect of directors over and above mere wages and salaries (benefits in kind details, expenses claimed and paid etc).

If the company has been set up for PAYE, then ALL wages paid to directors and staff need to be returned and accounted for - even if no PAYE or NIC was payable on the wages paid in the year. There are special provisions for declaring and returning low paid staff - so they are not absolved from being included in the annual employer returns.

You are correct Eric, I was using the term loosely as I dont tend to use the word partnership, sorry if it was misleading.

I understand that P/T time are very much PAYE as my F/T staff but am I right in saying that if they earn £85.0 (I am not at work and so have guessed at this figure) I do not have to submit returns fro them. I have been told to just issue a pay slip and I also record the payments on a P11 (I use the online version and no tax or NI is decucted)

Thanks
Steve

[Eric Mc]

Details of wages paid to low paid staff ARE returned to the Revenue in the Employer's Year End Annual Return. They can be included in the main P35 and P14/P60 submissions or they can be included on a Form P46.

If they receive any benefits in kind, these need to be returned on a Form P9D for each low paid employee.

Benefits in Kind Expense claim details for higher paid employees and directors are returned on the Form P11D.

[Brown and Boris]

Di I recal that employees (but not directors) who are paid under the tax threshold don't pay any BIK on company cars?

[Eric Mc]

Lower paid employees are taxed on BIKs on a "cash equivalent" basis. Therefore it is highly unlikely that they would be liable to a BIK on the use of a company car - although it could depend on the nature of the arrangement between the employer and the employee.

You need to be aware (if you aren't already) that a Lower Paid Employee who is paid at an annual rate (including the Gross Equivalent of any Benefits received) of £8,500. This could mean that some employees who are actually paid below the National Minimum Wage might not be deemed to be Lower Paid Employees for BIK purposes.