Payroll: what your organisation has to do

The first time your organisation employs someone, it becomes an employer in law. That brings duties around paying people correctly, deducting the right tax, reporting to HMRC and enrolling staff into a pension. None of it is difficult, but all of it has deadlines.

This page sets out what those duties are. It does not repeat the rates and thresholds, because they change every April - the links throughout go to the current official version.

Before your first payday

• Register as an employer with HMRC. This has to be done before the first payday, and it is not instant, so allow time. HMRC will issue a PAYE reference. Register as an employer
• Decide how payroll will be run. Either payroll software that reports to HMRC, or a payroll provider. Doing it on paper is no longer an option.
• Check the person can work in the UK. The check has to happen before they start. Right to work checks
• Give a written statement of employment particulars. This is a day-one right, not something to send on later. Employment contracts
• Take out employers' liability insurance. Required in almost all cases as soon as you employ anyone.

Every time you pay someone

• work out gross pay, then deduct income tax and National Insurance
• report the payment to HMRC on or before the day you pay it - not afterwards
• give each employee a payslip
• pay HMRC what you have deducted, by their deadline

Statutory payments - sick pay, maternity and paternity pay and similar - run through payroll too, and have their own qualifying rules.

Running payroll: PAYE for employers

Pensions and automatic enrolment

Automatic enrolment applies to every employer, including one with a single member of staff. You must assess whether the person qualifies, enrol them if they do, pay employer contributions, and tell The Pensions Regulator what you have done by completing a declaration of compliance. The duties then repeat: staff have to be re-assessed and re-enrolled roughly every three years.

These duties apply whether or not anyone asks you about them.

The Pensions Regulator: employer duties

Keeping records

Payroll records have to be kept for at least three years after the end of the tax year they relate to. Many organisations keep them for six, so that they sit alongside other tax records and are all disposed of together.

Payroll data is some of the most sensitive personal information an organisation holds - salaries, National Insurance numbers, dates of birth, bank details - so it needs to be stored securely and covered by your data protection arrangements. If you use a payroll provider, you need a written agreement with them setting out how they handle it.

Where to get help

If this feels like a lot to take on alongside running your organisation, it is worth knowing that FVA runs a payroll service for exactly this situation - small voluntary and community organisations with a handful of staff.

FVA's payroll service

We are also happy to talk it through even if you would rather run payroll yourselves.