PAYE is basically your tax to the HMRC your NI is for your pension when your older and to cover costs to the NHS if you get sick.
A limited company must register if they plan on paying employees. If you are the sole director and do not have any employees and you don’t take wages from your company and choose to take dividends instead you don’t have to register as your dividends are covered through your company’s corporation tax.
You can have both wages and dividends, however if this is the case you will need to register for PAYE.
How to Register for PAYE?
There are two ways to do your payroll either do it yourself or get an accountant to do it for you. If you decide to do the wages yourself, you need to complete certain tasks to pay your employees for the first time. You can choose when and how often to pay your employees.
- Contact HM Revenue and Customs (HMRC) and get a login for PAYE Online.
- Choose payroll software to record employee’s details, calculate pay and deductions, and report to HMRC.
- Collect and keep records.
- Tell HMRC about your employees.
- Record pay, make deductions and report to HMRCon or before the first payday.
- Pay HMRC the tax and National Insurance you owe.
You’ll also need to complete certain annual reports and tasks to prepare for the next tax year, which starts on 6th April each year.