10 Things Every Church Should Know About Employing Staff

Stewardship's Head of Treasurer Services, Jackie Fletcher, gives us her top ten things every church should know about employing staff.

Contract of Employment

From 6th April 2020, it has been a legal requirement for all employees and paid workers to have a written contract detailing the terms of their employment. Difficulties can, and do, arise where no defined terms are in place. For details of what should be included, check the ACAS (https://www.acas.org.uk/what-must-be-written-in-an-employment-contract/what-the-written-statement-must-include) website. 

Employer National Insurance Allowance

This is a government rebate of employer NI costs. Are you claiming yours? This could save you up to £5,000 a year off your employer NI costs. Not all employers are eligible, but if the employer’s NI bill is less than £100,000 in the tax year, then the majority are. Find out more here. (https://www.gov.uk/claim-employment-allowance)  

Employer National Insurance reliefs

If you are employing anyone under the age of 21, you are not required to pay employers’ National Insurance for them. More information here (https://www.gov.uk/government/publications/employer-national-insurance-contributions-for-under-21s/abolition-of-employer-national-insurance-contributions-for-under-21s-employer-guide) . Relief for employers who hire veterans was introduced in April 2021. It is available for 12 consecutive months from the veteran’s first day of civilian employment. Details can be found here. (https://www.gov.uk/government/publications/national-insurance-contributions-relief-for-employers-who-hire-veterans/national-insurance-contributions-relief-for-employers-who-hire-veterans) 

National Minimum Wage

You need to ensure that the salary paid, together with all of the hours worked by an employee (including volunteer hours worked in the employed role), meet the requirement for the National Minimum Wage, otherwise your reputation could be put at risk by being named and shamed and you may incur heavy penalties (the maximum fine is currently £20,000 per worker). Take a look here. (https://www.gov.uk/national-minimum-wage-rates) 

Recovering Statutory Payments from HMRC

All employers can claim back Statutory Maternity, Paternity and Adoption Pay from HMRC, as well as an NI compensation payment for smaller employers. This now includes Statutory Parental Bereavement Pay, introduced in 6 April 2020. In addition, where the monthly PAYE liability is less than the amount recoverable, employers can apply for advance funding from HMRC to cover the full amount of Statutory Pay before the leave starts. More information on the HMRC website. (https://www.gov.uk/hmrc-internal-manuals/statutory-payments-manual/spm180800) 

Volunteer vs Employee

Would HMRC class your volunteer worker as an employee or paid worker? It could be costly if you are treating someone as a volunteer or self-employed when they should be an employee. Things to consider: a) Do volunteers get paid more than their specific expenses? b) Are you making regular payments to them? c) Are individuals managed by you but paid by an overseas organisation? A tool to guide you is available on the HMRC website (https://www.gov.uk/guidance/check-employment-status-for-tax) , however if you are in any doubt, make sure you get confirmation from HMRC on an employee’s status.

Reporting to HMRC

Do you have a cleaner that you pay in cash on a regular basis? Under the rules of HMRC (https://www.gov.uk/paye-for-employers) , if you have a PAYE number, ALL employees should be reported through Real Time Information, with the information being submitted to HMRC on or before the date that someone is paid. This will include details of the correct tax and NI deductions for each employee. 

Expenses and Benefits

If you pay expenses or benefits to your employees, you may need to advise HMRC and pay tax and NI on them. These can be reported once a year using form P11D or, if you apply before 5 April (at the beginning of the tax year), these benefits can be put through the payroll. The expenses and benefits that we often find churches and charities get wrong are: using employer vehicles, employer paid housing and repaid personal mobile phone costs. Take a look here. (https://www.gov.uk/employer-reporting-expenses-benefits) 

Shared Parental Leave

Employees can take time off together or share the parental leave during the first year after the birth or adoption of their child. Find out more here. (https://www.gov.uk/shared-parental-leave-and-pay)  

Shared Marriage Tax Allowance

Did you know your employees could reduce their tax bill by between £364 and £941.50 a year (for tax year 2022/23) through the married couple’s tax allowance? More information here. (https://www.gov.uk/married-couples-allowance)