If you’re a growing business taking on your first employee, you’ll usually have to register as an employer. Registering is a simple process and is vital to avoid penalties and further action. Read on to find out how to join the 1.4 million registered employers in the UK.
When must you register as an employer?
You must register as an employer with HMRC as soon as any of the following apply to your company:
- You employ a worker who earns more than £120 per week (in the 2021/22 tax year), or
- You hire somebody who has another job elsewhere, or
- You employ somebody who receives a pension, or
- You provide an employee with benefits or expenses.
Whether you register as an employer or not, you must always keep complete records of any payments made to staff. If you also apply to any of the above, you must immediately register as an employer. Some individual circumstances can seem a little less clear cut.
Do I have to register as an employer to use contractors or subcontractors?
Construction companies wishing to take on contractors and subcontractors for projects must first register for CIS. You must register as an employer as part of this process.
Do I have to register as an employer as a director only company?
Directors should receive the most tax-efficient salary possible from their company. Sometimes, that might mean no salary is best. However, it’s best to pay directors a small compensation in most cases, meaning you would have to register as an employer. Do you need an accountant to help you decide the optimum director salary? If so, speak to a trusted accountancy partner.
Is there a deadline to register as an employer?
Once you know that you’ll have to register as an employer, you should do so as soon as possible. The absolute deadline will be before your first employee payment is made. However, it can take a few weeks for HMRC to process your registration and provide relevant details. As such, you should register with plenty of time to spare.
There is, however, a limit to how much notice you can give when registering as an employer. HMRC will not accept registrations more than two months in advance, so the optimum time to register is between four and eight weeks before your first payday. Do not pay employees without first registering as an employer.
How to register as an employer
There are two ways to register as an employer online. If you’ve already registered with HMRC, then you can sign up through your online portal. There will be an option to look at additional services, one of which should be registering as an employer.
If you haven’t yet registered online, there are some extra steps to take. You’ll have to register as an employer directly on HMRC’s website.
What information will HMRC need?
To register as an employer, you’ll need to give HMRC the following information:
- Company name, number and address
- Number of employees (including all directors)
- Your intended first payment date
- Director information, including name, email address and national insurance number
- Any further data, such as CIS registration or information of additional benefits you’ll give to employees.
Once you’ve registered with HMRC, you’ll be able to access and change some details online. You can also use the same online portal to access other information if needed, such as VAT.
What happens if I don’t register as an employer?
Should you fail to register as an employer before making your first employee payments, there are various consequences. There is no direct penalty for not registering. However, by not registering, you will automatically fail to report payroll correctly.
Penalties for failing to report range from more minor financial fines to potential criminal action. For example, a company that employs fewer than 10 workers will currently pay £100 per month in penalties. As such, it’s critical to register as an employer correctly and on time.
Need a hand?
If you need help registering as an employer, it’s best to speak to a professional. Get in touch with UWM today for expert advice on your company’s financial situation.
