The aim of this page is to provide a staged process to assist individual Methodist churches in assessing their circumstances and determining whether registration as an employer is necessary.
Does your Church have employees?
A local Methodist church may pay individuals for various roles, such as Administrators, Cleaners, Organists, Care Takers or other positions.
In most cases, these individuals will have contracts and receive regular payments and be considered employees. This means Methodist churches should assume PAYE and RTI compliance will apply.
If in doubt as to whether someone falls under employee, worker, or self-employed status please read the Government guide:
https://www.gov.uk/government/collections/employed-or-self-employed
Get ready to employ someone for the first time: step by step
Check what you need to do as an employer before you can take on an employee for the first time.
https://www.gov.uk/get-ready-to-employ-someone?step-by-step-nav=47bcdf4c-9df9-48ff-b1ad-2381ca819464
Registering as an employer
For comprehensive advice about registering as an employer, please visit the HMRC website:
https://www.gov.uk/register-employer.
As HMRC rules are constantly changing, therefore all local employers are advised to contact the HMRC to register, or to obtain authorisation to keep detailed records for employing only one employee subject to the maximum earning threshold set by HMRC (subject to the criteria set by the HMRC).
HMRC New Employer Helpline:
Tel: 0300 200 3211 (or 0300 123 1073)
address: HMRC, PO Box 205, Bootle, L69 9AZ
or register online.
HMRC Starter Checklist
You must establish whether the employee has another job and/or a pension, which would require the church to register as an employer. Therefore, all new employees must complete the HMRC Starter Checklist.
Use the HMRC Starter Checklist online form:
https://www.gov.uk/guidance/starter-checklist-for-paye
or download a pdf version here: Starter Checklist PDF format
Running a Payroll
Local employers may consider:
- Registering as an employer with HM Revenue & Customs allowing it to operate the “Pay-as-you-earn” (PAYE) Scheme. HMRC provide guidance on setting up payroll for the first time. For further details please go to:
https://www.gov.uk/basic-paye-tools
OR - Arranging to use the Payroll Bureau Service provided by the Finance Office at Methodist Church House. The Finance Office payroll team will provide full payroll service for a charge and administration fee of ca. £480 per annum inclusive of VAT, for up to five employees. There will be additional charge over five employees based on the number of employees on the scheme. For further information please contact the payroll team by e-mail: payrollbureau@methodistchurch.org.uk
OR - Arranging for an independent payroll service to run their payroll. Some churches, which employ only one person, as a cleaner, for example, may ask the Circuit Treasurer if they can assist by adding the cleaner to the Circuit’s payroll.
For further information please go to: https://www.gov.uk/paye-for-employers/choose-payroll
Payroll provider
You are responsible for collecting and keeping records of your employee’s details. Payroll providers offer different levels of support, for example looking after records, providing payslips and making the necessary payments to HMRC.
Running payroll yourself
HMRC provide guidance on setting up payroll for the first time. You may find it helpful to use PAYE software to help you manage the process.
Note re. Apprenticeship Levy
Many treasurers will be aware of the Apprenticeship Levy that was introduced by the government in April 2017. All employers with a pay bill in excess of £3m pay 0.5% of their pay bill as a levy to HMRC.
Further information can be found at https://www.gov.uk/guidance/pay-apprenticeship-levy .
Note from the Connexional Team's Finance Office:
HMRC determined back in 2017 that all Methodist churches, circuits and districts were a “connected employer” for the purposes of the Apprenticeship Levy. This means that individual churches and circuits cannot avoid the Levy by virtue of having a pay bill of less than £3m.
As we are treated as one organisation our total pay bill exceeds £3m and therefore we all have to pay the Levy. The Connexional Team took legal advice on this point back in 2017 (and a second opinion more recently) and the issue was raised in the Payroll Newsletters in 2018. The legal advice has supported the determination made by HMRC that the Methodist Church is in fact a “connected employer”. This means that in order for local employers to pay apprenticeship levies, they will need to register with HMRC for PAYE and pay the levy regardless of their payroll size.
If your church/circuit/district employs people, you are subject to the Apprenticeship Levy. If those employees are paid through the Payroll Bureau at Church House you do not need to take any action as you have been paying the Levy since it was introduced. However, if you have local payroll arrangements in place you need to check that the Apprenticeship Levy is being paid to HMRC. If this is not the case you will need to talk to your payroll provider and make arrangements to do so.
The process for payment of the Levy can be found at https://www.gov.uk/guidance/pay-apprenticeship-levy .
It should be noted that:
- If you have not been paying the levy historically you will need to make a back payment from April 2017.
- The full ‘allowance’ of £15,000 is taken centrally by the Payroll Bureau so the amount of levy you owe is 0.5% of gross pay.
If you are unclear if this affects you please contact our Payroll Bureau on 020 7467 3548.