There are a number of potential changes to your business that have implications for your operation of PAYE. This guide sets out what you must do in some of the most common cases such as ceasing to employ anyone, closing your business or selling the business on to someone else.
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If you close your business down there are a number of important tasks that you need to carry out:
It's important to make sure you let all the relevant parts of HMRC know that your business has closed down. This will ensure you won't underpay or overpay any tax and will prevent HMRC from sending you demands or bills that you aren't liable for. You can read more about who to contact and what to do in the guide 'Closing or selling a business' - follow the link below.
If you face a temporary gap in employing anyone (meaning you will
owe no PAYE tax or NICs), then the steps you must take depend on the
length of the gap.
There are numerous possible reasons for this kind of gap in PAYE liabilities - for example, seasonal businesses often employ no-one during the quiet months of the year.
You must give your employees a form P45 on the day on which the employment ceases. Where you intend to keep your employees on your payroll during this temporary period you do not need to give them a P45. However if they are not going to be paid for a period of three months or more, you must set the irregular payment pattern indicator on the final FPS before the start of the period in which they won't be paid.
If you expect that your gap in liabilities will be for less than a whole tax year, then your PAYE scheme will continue to operate. However, because HMRC expects regular payments from every operational PAYE scheme for each tax month you must submit an EPS to indicate that you have not had or will not have payments to make for a particular period(s). You can do this by using:
If you don't intend to employ anyone for at least one whole tax year, you must:
If you start to employ someone either in the tax year the PAYE scheme was closed or the following tax year you can send an FPS with the Employer PAYE reference of the closed scheme so that it can be re-opened. If you start to employ someone after this period you will need to contact the Employer Helpline or write to HMRC so that a new PAYE scheme can be set up.
Where your business and its payroll is taken over or there is a change of ownership you must contact the Employer Helpline.
Where some but not all of your employees transfer from one employer payroll to another you will need to take action depending on which payroll you administer.
Check that the payrolls use a different Employer reference before proceeding and if one of the payrolls is not submitting PAYE submissions in real time you must contact HMRC's Employer Helpline for advice.
You need to note the date of leaving on the last FPS for each employee. You will also need to move the relevant pay, tax and code information to the new payroll.
You do not need to prepare forms P45 for the affected employees.
Include the full starting details for the new payroll on the FPS.
Work out and deduct PAYE tax and NICs from any payments you make to the transferred employees from the date they moved payrolls. Use the pay and tax details from the previous employer if operating a cumulative tax code.