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  • Tracy Irvine

Can a Sole Trader Employ Staff?

A question which I have been asked several times recently, can I employ staff as a Sole Trader?, the answer is yes you can employ staff just the same as a Limited Company, and you must tell HMRC you are doing so.


First thing is to Register as an employer with HMRC, this can be done online yourself or your Bookkeeper/Accountant can do this for you if they offer this service. HMRC will send you your PAYE reference numbers usually within 5 working days which must be used whe

n running your payroll. You need to register before you run your first payroll but no more than 2 months before. More details can be found on the gov website


https://www.gov.uk/register-employer


Decode how much you are going to pay your employee, you must pay at least the minimum wage.


Ask your new employee for their P45 form last job or if they can't provide one ask them to complete a New Starter Checklist, you will need this so you know what tax code to use


You will then need to decide how you are going to run your payroll, Software is available enabling you to run and process your own payroll or you can use the services of a payroll provider.


As soon as you take on an employee you have legal duties regarding automatic enrolment, you will need to access whether you need to put your employee into a Pension Scheme or not, if an employee meets the criteria below they should be enrolled in a workplace pension


  • are not already in a suitable workplace pension scheme

  • are at least 22 years old, but under State Pension age

  • earn more than £10,000 a year for the tax year 2020-21. You have a duty to complete an online Declaration of Compliance with the Pension Regulator telling them what you have done regarding automatic enrolment.

An employee can choose to opt out of the workplace pension if they wish.


You can find further guidance on the Pension Regulators website https://www.thepensionsregulator.gov.uk/en


If you require any further guidance or help please contact me

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