The Happy Accountant

Occasionally, a new employee will start without a P45.  An Employer must then use an emergency tax code.
The emergency tax code is currently: 543L, although, from 7 September 2008 it will be 603L.
Using this code usually means that the employee gets their basic personal allowance, but does not take into account any other circumstances that [...]

Sometimes a tax code may have two letters and no numbers or be another combination:
BR Code
This code is commonly used where it is an employee’s second job and the all their personal allowances are used in the first/main job.  All income earned under a BR tax code will be taxed at basic rate.
D0 Code
An employee with [...]

L Codes
Used for employees who are eligible for the basic personal tax allowance and also as an “emergency tax code”.  This is the usual code for employee’s main (or only) job with straightforward tax affairs.
P Codes
Used for people aged 65-74 who are eligible for the full Personal Allowance.
V Codes
Used for people aged 65-74 who are eligible [...]

A tax code is the short alphanumeric (eg. 543L) code that an employer uses to work out the correct tax to deduct from an employee’s gross pay.

IR35 was first propsed in 1999 and was introduced into UK legislation in 2000. The primary aim has been to prevent the avoidance of tax and national insurance by trading through an intermediary (commonly a limited company) rather than being an employee.
Prior to IR35, individuals could form a limited company and invoice their “client”/”employer” and [...]

Once a payroll is in operation, HMRC lay down certain requirements as to what records and information needs to be kept.  These include:

employees names, addresses (and their dates of birth)
gross pay, NICs, PAYE, other deductions, net pay (keeping a copy of their payslip would normally satisfy this requirement, assuming the payslip contained all the correct [...]

Logically, the basics of payroll are straightforward but unfortunately, there are various rules and thresholds which can make actually operating a payroll less so.
In calculating an employee’s pay, normally, you begin with their gross pay and then work out the deductions.  After taking away all the deductions, the net pay figure is what is left owing to [...]

It is generally possible to register as an employer by telephone or email (if special circumstances apply, you may have to register via and HMRC office).  Either way, you will need the following information to hand:

general information about yourself and your company (including your national insurance number and UTR number - unique taxpayer reference number)
information [...]

As soon as you take anyone on where any of the following conditions apply, you need to register with HMRC as an employee.

the employee already has another job
the employee receives a pension (state or occupational)
the employee will earn at or over the PAYE (tax) threshold
the employee will earn at or over the lower earnings threshold [...]

On top of their pay, you may offer your employee “perks” such as a company car, clothing allowance, relocation expenses, childcare vouchers and private health insurance, to name a few.
Some of these benefits will be taxable in the hands of the employee: that is, the employee will have to pay tax on the financial benefit of [...]