Pay As You Earn (PAYE) & Pensions

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If your PCC has any paid workers or employees, the guidance here will help you find what actions you need to take.

What are my PCC's responsibilites?
It is vital that PCCs act responsibly as employers in regard to income tax, national insurance and workplace pensions.

We have produced this briefing paper to inform PCCs of the issues relating to paying employees and ensuring that HMRC guidance is correctly applied.
Does my PCC need to run PAYE?
Your PCC must register with HMRC as an employer, and operate a Pay As You Earn (PAYE) Scheme if any of the following apply: It is your responsibility as a PCC to establish:
  • who your employees are,
  • whether you are required to register as an employer and operate a PAYE Scheme.
Once your PCC has registered as an employer, all payments to all employees - regardless of amount or frequency - must be reported to HMRC through the PAYE system.

If your PCC does not need to operate a PAYE Scheme, but you do employ individuals on a regular or occasional basis, you need to retain records - for the next three full tax years - of each employee's:
  • full name, address and NI number,
  • total amount paid over the tax year.
PCC employee or self-employed?
Anyone who receives money from a church for any reason, other than the reimbursement of allowable expenses, may be an employee of the PCC. This includes any honorarium (usually paid to someone for a ​service for which there is no ​official ​charge), regular, irregular, or one-off payments. For example, PCCs often employ people in the following roles:
  • organists
  • vergers
  • sextons
  • cleaners
The only exceptions are clergy (including retired clergy) who are 'office holders' rather than employees.

If an individual is not already registered with HMRC as self-employed, you can use HMRC's anonymous Employment Status Indicator (ESI) to verify the person's employment status.
PAYE Software
If you need to register with the HMRC PAYE scheme, you may find it helpful to use PAYE software to help you manage the process. To operate effectively, PAYE software need to be able to connect with HMRC online to update your records on their system.

Click here for a list of HMRC validated PAYE software.

All the software listed should be free to use if your PCC employs fewer than ten people.
Real Time Information (RTI)
HMRC requires all UK employers to notify them of any payments made to their employees at the time they pay them.  This notification is referred to as Real Time Information, or RTI.

You can find a guide for churches on the Parish Resources website, and more detailed information on the HMRC website.
Pensions
The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’.

If your PCC is a registered employer, you must consult the Pensions Regulator's website to determine when you must auto-enrol all eligible workers and offer a workplace pension to any others who wish to join.

You can access the latest information on what this means for your PCC through the Pensions Regulator's website.

You can also find guidance on who might provide your church with a suitable pension scheme on the Parish Resources website.
If you need help with PAYE & Pensions

If you have any queries concerning PAYE for your PCC, please contact either:

gordon.fath@liverpool.anglican.org
Resources Officer
0151 705 2180

sharon.townson@liverpool.anglican.org
Human Resources Adviser
0151 709 9722.