Employment, Payroll and Pensions
The issue of whether your church is an employer and needs to register with HMRC is important as it has implications in terms of PAYE and Real Time Reporting (RTI). There is a wealth of information and guidance available online but hopefully this summary with pointers to the more helpful web links, will take some of the headache out of the process.
The new system surrounding PAYE came in at the start of the 2013/2014 tax year but became mandatory from October 2013.
As always, parishes resources provides helpful guidance and overview to assist your PCC becoming compliant, including “Employment Status for Tax Purposes: A short Guide for PCCs”.
The aim of this page is to provide a staged process to assist individual churches assessing their particular circumstances to determine whether registration is necessary.
Does the Parish have employees?
A PCC may be in a situation where money is paid to individuals for various reasons e.g. administrators, bell ringers, cleaners, vergers, organist etc. The intricacies of this point of “employment” means that the guidance is general, and each situation must be assessed on its own circumstances.
The approach to be adopted therefore, is that in relation to each person receiving payment, the PCC should follow the general principles set out in, “Employment Status for Tax Purposes: A short Guide for PCCs”, under the heading, “What constitutes Employment”.
If further assistance is required to determine employment status then look at the Employment Status Indicator or contact the HMRC Status Customer Service Team Helpline on 03000 527 450.
If the outcome of this exercise is that individuals are self employed, then for each individual, the PCC needs to keep a record of the following:
- Employment Details;
- Employment Reference
- Name & Address
If the outcome is that one or more individuals are employees of the PCC, then further steps need to be worked through to ensure compliance. For an extremely comprehensive staged explanation read, “PAYE & Real Time Information: A Guide”, under the heading, “New Changes to PAYE and Real Time Information”. That document sets out the following stages to work through to become compliant:
Do I need to Register as an Employer?
From the point someone is first employed by the PCC, the PCC would need to register with HMRC as an employer if one or more of the following apply:
- Paying at or above the PAYE threshold
- Paying at or above the National Insurance Lower Earnings Limit
- The Employee already has another job
- The employee is in receipt of a Pension
- The PCC is providing the employee with any employee benefits.
Even if only one employee satisfies these criteria, then all employees must be processed through payroll and the PCC must register. If however, no employee meets the above criteria meaning every employee is paid below the National Insurance Lower Earnings Limit, and they have no other jobs, then it remains the responsibility of the employee to declare their earning to the Department of Work & Pensions.
This section of the guidance offers help on how to register online as an employer and the timescales for receiving the information.
The PCC will receive a PAYE reference number and an Employers Registration Number.
The ERN should be given to the PCC’s insurance company as it is relevant for Employers Liability Insurance.
How will RTI affect us?
This section explains that affected PCCs need to submit payroll information online on or before the date of each payment to employees, through Real Time Information. To do this PCCs will need to have appropriate software packages to enable the submission of payroll information online to HMRC. A free package, “HMRC Basic PAYE Tool”, can be downloaded from HMRC to run payroll systems for up to 9 employees. If your PCC has more than 9 employees then the above web link provides a list of HMRC recognised and tested PAYE software.
The key to successfully inputting data and setting up the system for each employee is ensuring that all details are accurate and complete. The guidance, “PAYE & Real Time Information: A Guide”, therefore sets out the information required in advance to ensure that the set up is done accurately.
The guidance then provides details as to providing P60s and keeping payroll up to date, taking account of employees starting and leaving the PCC’s employ.
For additional Help call:
Main HMRC Employer Helpline: 08457 143143
New Employer Helpline: 08456 070 143
In addition, the Stewardship Adviser can be contacted on 02392 899655 or firstname.lastname@example.org