From 6 April 2013 the special arrangement that HMRC had with all churches (Local Religious Centres - LRCs) changed significantly.
A church must now register as an employer with HMRC and operate a PAYE (Pay As You Earn) Scheme if any
of the following apply,
they pay an employee at or above the PAYE or NI Lower Earnings Limit,
they employ anyone who already has another job,
they employ anyone who is receiving a state, company, or occupational pension,
they provide an employee with employee benefits.
It is the responsibility of the PCC to establish whether they are required to register as an employer and thus report PAYE. The level or frequency of any payment(s) is not relevant.
Once a church has registered as an employer, all payments to all employees - regardless of amount or payment frequency - must be reported to HMRC through their PAYE system.
Churches that do not need to operate PAYE, but do employ people on a regular or occasional basis, need to retain records of each employee's,
name, address and NI number,
total amount paid over tax year.
These records must be kept for the next 3 full tax years.
HMRC's guidance is accessible from the page link below.