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Hiring your first employee- a UK guide

blog.crispyfriedsoftware.com

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Re: Hiring your first employee- a UK guide

#11

Post by pwaring »

tomgallard wrote: post #8
MarkMc wrote: post #7

I'm curious: Could you not simply designate the new hire a 'contractor' since they are working from their own premises? You could then save having to deal with all the employee paperwork and insurance...?

You have to be pretty careful with this sort of thing. You can't just say someone is a contractor and they become so. This is covered by something called 'IR35'. What this basically says, is if someone looks like an employee, they're doing the job of an employee, then they are an employee, whether you like it or not. Most UK IT contractors will be pretty familiar with this situation, and the ways to avoid being caugh…

IR35 is not quite the same as whether someone is employed or a contractor - you could claim to be a self-employed contractor when working from home and IR35 would not apply. If you did that then it would be a question of whether you were employed or self-employed, and that would determine which forms of national insurance contributions were paid (your income tax would remain the same).

IR35 was introduced to stop contractors from setting up a limited company and then having the company contracted instead of the individual. The individual would then take dividends out from the company, which are taxed at a lower rate and not subject to national insurance.

http://www.hmrc.gov.uk/ir35/

Re: Hiring your first employee- a UK guide

#12

Post by polshaw »

About PAYE;

What happens if you are employing someone at the limits and then they go out and get a bar job too? Would I then be liable for the relevant amount of contributions? Am i responsible for knowing that my employee hasn't gone and got another job without telling me??

Assuming i would be responsible for PAYE if they got more work, then am I allowed to make not having other employment part of their contract? If i am not making PAYE contributions, does the employee have any NI contributions? (eg. paid by the state?), or are they elligable for any tax credits/benefits? (IIRC JSA could be claimed if working Finally, How do all these things change if you are employing someone from the EU, or outside??

Re: Hiring your first employee- a UK guide

#15

Post by tiptup »

Great guide but I want to highlight the employer's responsibility for home-working employees (self-employed would cover this themselves) as your first employee, Hannah, falls into this category.

The employer is still responsible in providing suitable office equipments for the home-worker, i.e. office chairs, desks, lighting and computers. If the home-worker is using their personally-owned equipment for work, the employer is still liable in ensuring the equipment is fit for purpose and get it test/certified for electrical items.

It is up to the employer to ensure the home office is at the same health and safety and data protection standards as they would in the office and yes a H&S risk assessment will have to be carried out.

You may also have to purchase public liability insurance if they receive business visitors into their homes as well.

I'm not trying to put a downer to home-working (I do some myself) but few SMEs realise the true implications of offering home-working until they get a letter from the lawyers demanding compensation for their employees' injury from tripping on some cable they placed themselves in their home office whilst working.

Re: Hiring your first employee- a UK guide

#16

Post by tehwalrus »

polshaw wrote: post #12

About PAYE; What happens if you are employing someone at the limits and then they go out and get a bar job too? Would I then be liable for the relevant amount of contributions? Am i responsible for knowing that my employee hasn't gone and got another job without telling me?? Assuming i would be responsible for PAYE if they got more work, then am I allowed to make not having other employment part of their contract? If…

first, ask an accountant. about everything there.

second, some friendly advice: my approach would be to register them for PAYE even if they're only close to the threshold; this means they are future proofed if they step up hours / get a bar job. I know economists will tell you effort up front is worth more than cheaper effort in the future, but that's only one opinion!

finally, I believe that EU citizens are treated exactly the same once issued an NI number - but see my first comment about all matters of tax law!

Re: Hiring your first employee- a UK guide

#17

Post by polshaw »

tehwalrus wrote: post #16
polshaw wrote: post #12

About PAYE; What happens if you are employing someone at the limits and then they go out and get a bar job too? Would I then be liable for the relevant amount of contributions? Am i responsible for knowing that my employee hasn't gone and got another job without telling me?? Assuming i would be responsible for PAYE if they got more work, then am I allowed to make not having other employment part of their contract? If…

first, ask an accountant. about everything there. second, some friendly advice: my approach would be to register them for PAYE even if they're only close to the threshold; this means they are future proofed if they step up hours / get a bar job. I know economists will tell you effort up front is worth more than cheaper effort in the future, but that's only one opinion! finally, I believe that EU citizens are treated…

It's not just effort, avoiding PAYE is saving money.. bootstrapping and all that.. similarly for the accountant, although i am due a meeting. Still, if anyone knows, please go ahead and share.
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