Taking on an employee: BSR Bespoke's guide to what you need to know

Whether you are taking on your first or your hundredth employee, new staff bring fresh possibilities, new skills and additional capacity to your business. Hiring signifies growth and expansion, but it also comes with many responsibilities and obligations as an employer. BSR Bespoke accountants in Tunbridge Wells can support you every step of the way so you can feel confident in your role as an employer and focus on the success of your business.

First steps: filing requirements and auto-enrolment

As a UK employer, there are specific filing requirements to fulfil. These include registering a payroll scheme with HMRC, setting up a pension scheme, providing a written employment contract to your employees, and keeping accurate pay records.

Under the payroll scheme, you must keep accurate records of an individual’s gross pay, tax, national insurance (NI) contributions and deductions and report them to HMRC. This is all reported under RTI (Real Time Information), which requires you to submit the information to HMRC on or before each payday.

Auto-enrolment is a mandatory workplace pension scheme in the UK. It requires employers to automatically enrol eligible employees into a pension scheme and contribute on their behalf within three months. This applies to all employees aged between 22 and state pension age who earn at least £10,000 a year. Please note that following a recent government bill, it is possible that this age threshold may change to 18 and that the lower earnings limit may be removed.

Tax and taxable benefits

As an employer, you are responsible for deducting income tax and national insurance contributions from your employees' pay. You must also provide them with a payslip detailing these deductions. In addition, you may offer certain taxable benefits to your employees, such as company cars or health insurance. These benefits will be subject to taxation. As an employer, you need to pay employer national insurance on your employees' salaries, subject to the employment allowance and the value of the benefits provided.

Deductions

Payroll software calculates how much income tax and national insurance to deduct from your employees’ pay. Other possible deductions are student and postgraduate loan repayments, pension contributions, Payroll Giving donations and child maintenance payments.

Employee benefits

Aside from statutory requirements like auto-enrolment and minimum holiday entitlement, you may also offer additional benefits to your employees. These include private health insurance, childcare vouchers, or flexible working arrangements. In a tight labour market, providing these employee benefits can help attract and retain top talent in your business. Some benefits are taxable, such as health insurance and company cars. In contrast, others are non-taxable - for example, providing an employee with one laptop and one mobile phone, subject to them being returned at the end of their employment.

Holiday pay and sick pay

In the UK, full-time employees are entitled to at least 28 days of paid holiday per year (including bank holidays). Part-time workers cannot be treated less favourably and are entitled to the same, in proportion to the hours worked. Sick pay is also a legal requirement, with employees eligible to receive Statutory Sick Pay (SSP) if they are off work due to illness for more than four days in a row.

Leave and pay for parents

Maternity/paternity pay and leave is another important consideration for employers. Eligible employees can take up to 52 weeks of maternity leave, with the first six weeks paid at 90% of average weekly earnings and the remaining 33 weeks at £151.97 per week or 90% of average weekly earnings (whichever is lower). Their employment rights are protected while on statutory maternity leave. This includes their right to pay rises and build up holidays.

There are also regulations for paternity, adoption, and shared parental leave. Employers may also choose to create a more generous programme by, for example, setting up an OPP (occupational paternity pay) scheme.

How can BSR Bespoke accountants assist you as an employer?

Navigating the complexities of hiring and managing employees can overwhelm any business owner. Our experienced and friendly Tunbridge Wells team will help simplify this process.

• Our team can assist with your business's responsibilities, such as registering a PAYE scheme with HMRC, setting you up with payroll software or one of our trusted payroll providers, submitting the annual P11d (expenses and benefits form) and putting you in touch with the right people to help you with your pension scheme requirements.

• We will ensure you are aware of any measures that could support you with your employer costs, such as the employment allowance, which is designed to reduce the employer national insurance liability for smaller employers.

• We can put you in touch with trusted employment law specialists who can make sure that you have the proper employment contracts in place for your businesses and be there to assist with general employment law enquiries.

• We can guide you on the costs to the business and employees in setting up different employee benefits packages so that you can choose the suitable packages for you and your employees.

Employee case study

Gerald, who was running a small marketing agency alone, approached us for assistance when he won a big new account. He had begun a recruitment process to grow but knew he would need assistance. We helped set up a company PAYE system, explained the tax rates and filing requirements and helped set up the payroll module on his software to manage that. We also put him in touch with contacts to help with the employment contracts and setting up a pension scheme.