The Right to Work check is only one part of the onboarding process.
To operate PAYE correctly, the employer should also obtain sufficient information to identify the employee and establish the correct tax treatment.
A standard new employee payroll information pack should normally include:
Personal information
- Full legal name, Previous names, where relevant
- Residential address, Postcode
- Date of birth, Gender
- Personal email address, Telephone number
- National Insurance number
- Bank details: Bank account name, Sort code, Account number
P45 – Important for New Employees
If the employee has left another UK employment, they should normally provide theirP45 from their previous employer.
- The P45 provides important information for payroll, including:
Previous employment details, Pay to date, PAYE tax deducted, Tax code, Leaving date
Employers should enter the relevant information into their payroll system.
What If the Employee Does Not Have a P45?
If the employee does not have a P45, the employer should obtain the information required through the HMRC Starter Checklist for PAYE purposes.
The employee will generally need to provide information about whether they:
- Have another job, receive a pension, have recently left another job.
This information helps determine the appropriate starter declaration and tax code.
Employment Contract and Salary Information
The payroll team should receive the relevant employment information, including:
- Employment start date, Job title, Annual salary or hourly rate, Contracted hours, pay frequency, Normal pay date, Overtime arrangements, Bonus arrangements, Commission arrangements, any salary sacrifice arrangements, benefits provided, pension arrangements
The payroll information should agree with the employee’s employment contract.
Student Employees
Where an employee is a student and their immigration permission limits the number of hours they can work during term time, the employer should obtain and retain appropriate evidence of the course’s term and vacation dates where required.
Employers should also monitor working hours to ensure that the employee does not exceed their permitted working hours.
Employees Receiving Benefits
If an employee is provided with benefits, the employer should identify them at the start of employment.
Examples include:
- Company car, private medical insurance, employer-provided accommodation, beneficial loans, assets provided for private use, gym or club memberships, other taxable benefits
The employer should determine whether the benefit needs to be:
- Processed through payroll, reported on P11D, and/or
- Included in the employer’s Class 1A NIC calculation.
Collecting this information at the start of employment reduces the risk of benefits being missed at year-end.
Pension Information
Employers should also collect the information necessary to assess the employee for workplace pension purposes.
Payroll should be able to determine:
- Whether the employee is eligible for automatic enrolment;
- Whether pension contributions should be deducted;
- The employee’s contribution rate;
- The employer’s contribution rate; and
- The relevant pension scheme.
Payroll and pension records should be reconciled regularly.
