Taking on an employee

Updated on 20 April 2023

Once you have made the decision that taking someone on is the next step for you or your business, there are some important issues that you must think about. This section will help you understand whether you are an employer, and if so, what you have to do.

Illustration of people doing jobs around a house

Whether you are a busy family taking on a nanny or a successful tradesman taking on a labourer, the thought of becoming an employer might be daunting. This section is dedicated to providing information and guidance about key areas that you need to consider, to ensure that you meet your responsibilities and obligations as someone’s employer.

First you need to check that you will definitely be an employer. This will be the case if your worker is classed as an employee for tax purposes and not self-employed. We explain more about this in our tax status section.

As a first-time employer, one of the main things you probably need to do is register with HMRC so that a Pay As You Earn (PAYE) system can be set up. The main purpose of the PAYE system is for employers to collect tax and National Insurance (NIC) from their employees’ wages on behalf of HMRC and this is done as part of running a 'payroll’. We explain more in our setting things up section.

What other information can I find in this section of the website?

In this section, you will find more information about:

How the PAYE system works: including a look at the Employment Allowance and tax codes

Taking on a new employee: gathering the information you need to set someone up on your payroll

Real Time Information: information on the 'Real Time Information' (RTI) reporting system when filing online and also in relation to the limited circumstances in which you can file on paper

Pay and deductions: what counts as pay and what deductions can you make? Including your minimum wage and auto enrolment pension obligations

Ongoing payroll tasks: as well as running your payroll and submitting RTI information to HMRC, you need to pay your employee and give them a payslip, and pay HMRC regularly.

End of year processes: how to finalise your payroll each year and report any benefits and expenses you provide

Employee leaving: what to do if your employee leaves your employment

Employment law: if you are taking someone on you need to be aware of your employment law responsibilities

Keeping records: one of the most important aspects of being an employer

Getting things wrong: including what happens if you treat your employee as self-employed incorrectly

Getting more help: there is lots of help available for new employers

If you are considering offering a person work experience or someone is volunteering for you or your organisation (for example, because it is a charitable one), then there is some guidance on how to deal with any payments you make them from a PAYE perspective (e.g. for expenses) here.

If you used the Coronavirus Job Retention Scheme to help pay your staff during the pandemic, then you can find some information about the scheme on our dedicated page. The scheme closed on 30 September 2021. However, this page can be used as reference information for any employers needing or wanting to check their claims.

For information on the scope of the help that you can expect to find in this section, please see the about us section.

⚠️ Important note - We offer some specific pointers for those considering taking on a personal assistant, to supplement the information here, in our ‘Independent Living’ section.

Where can I get more help?

HMRC manage the UK tax system. You can find their contact details on GOV.UK.

There is a page of basic guidance for people employing someone in their own home on GOV.UK.

HMRC have lots of general help for new employers, including webinars, e-learning, emails and videos on employing people – see GOV.UK for further details.

If you do not agree with a decision of HMRC, find out what action you can take on our tax appeals page.

If you are unhappy with the way in which you have been treated by HMRC, you may be able to make a complaint.

In terms of your personal tax position rather than in your capacity of employer, if you want information on any of the following areas, you can find it elsewhere on this website:

Tax basics: information on tax allowances, tax rates and how to claim tax back;

Employment: how to check your coding notice, as well as looking at employment expenses and benefits;

Self-employment: how to work out your profits and losses;

Pensioners: tax on, and during, retirement;

Bereavement: tax issues arising on death for the deceased, their estate and surviving family;

Migrants: tax issues for migrants, including residence and domicile;

Students: things students need to know to get their tax right and to understand how student loan repayments work after they graduate;

Disabled people and carers: specific tax issues and pointers;

Other tax issues: including savings income and property rental income;

Tax credits and benefits: help to ensure you receive the appropriate credits and benefits;

Childcare: this section explains the different government childcare schemes and how they interact.

LITRG also has another website that you may find helpful:

RevenueBenefits: supporting information for advisers who get involved in HMRC-administered welfare benefits, and national minimum wage; including transitional information for the move of tax credits to universal credit.

Throughout this site we can only offer general guidance on tax topics that are most relevant to those on low incomes and you should always obtain specific advice before taking any action. You can find out where to get specialist help in our getting help section.

Tax guides

Introduction to the tax system How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax I have overpaid through PAYE on wages or pensions? How do I claim back tax if I complete a tax return? How do I claim back tax if I am taxed under the Construction Industry Scheme (CIS)? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance (PPI) pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Specified Adult Childcare credits? What is Scottish income tax? What is devolution? Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? Tax relief on your pension contributions HMRC digital services Enquiries, penalties, appeals, complaints and debt Enquiries How to survive an enquiry by HMRC Tax penalties Tax appeals Alternative Dispute Resolution How do I complain to HMRC? What if I cannot pay my tax bill? What if I have a tax credits overpayment?

Am I employed, self-employed, both or neither? Working through a limited company What is the national minimum wage? How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? How is tax collected on taxable state benefits? How do I check my coding notice? Do I need to complete a tax return? What tax do I pay on redundancy payments?Employment benefits and expenses What are benefits-in-kind? What payments and benefits are non taxable? What if I incur expenses in relation to my job? What travel expenses can I claim? What if I use my own car for business purposes? Payroll giving Allowances and expenses paid to armed forces personnel and deductions from their income Pensions and employees What is automatic enrolment for employees? What National Insurance do I pay as an employee? How do I repay my student loan? What if I do not pay enough tax? What if I pay too much tax? What if I work abroad temporarily? What if I am in the armed forces and work overseas? First time workers Apprenticeships

Am I employed, self-employed, both, or neither? How do I register for tax and National Insurance? What business records should I keep? Working out profits, losses and capital allowances When do I make Self Assessment payments and file my tax return? How do I pay tax on self-employed income? What tax allowances am I entitled to? What is the trading allowance? What National Insurance do I pay if I am self-employed? What is the Construction Industry Scheme (CIS)? Tax checks for taxi, private hire and scrap metal licences How do I work out my profits for universal credit? Do I have to pay VAT if I am self-employed? What is Making Tax Digital for VAT? Pensions and self-employment How do I repay my student loan if I am self-employed? Introduction to enquiries

Tax status Setting things up How the Pay As You Earn system works Taking on a new employee Reporting PAYE in real time Pay and deductions Ongoing payroll tasks End of year processes Employee leaving Employment law Keeping records Getting things wrong Getting more help

Can I live and work in the UK? Residence and Domicile Employment and self-employment National Insurance for migrants Coming to the UK to study Other migrant issues EU and EEA countries

Going abroad Other income Student loans Types of student Volunteering and training Working Do students have to pay council tax? Glossary of Forms Jargon buster Where can I get further help and information?

Help for employees and the self-employed Help for employers Independent living Caring for someone VAT reliefs for disabled and older people Trusts for disabled people Apprenticeships and disability

Savings and tax Property income Council tax and rates Giving to charity Income from a trust or from the estate of a deceased person Capital gains tax Cryptoassets and tax Do I need to register my trust?

Tax credits and benefits Tax credits State benefits Child benefit Universal credit

Employer-supported childcare Free childcare places Tax credits childcare support Universal credit Other childcare support Tax-free childcare

Taxes on death: overview Dealing with the deceased's own tax affairs Tax on income and gains after death Death of a spouse or civil partner Joint property on death Pension and life assurance policies on death Income from a deceased's person's estate Inheritance tax reliefs and exemptions State benefits on death Getting help with bereavement and inheritance tax Bereavement jargon buster

Taking on an employee

What other information can I find in this section of the website?

Where can I get more help?

Tax guides

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