Making It Easier > Making it easier to... > Manage parish finances > PAYE

They may not realise it but many PCCs are employers. The guidance provided here will help you discover the actions you need to take.

Prior to April 2013 Local Religious Centres (churches) had a special arrangement with HMRC that did not require the notification of very low value payments (less than £100 per annum).  However, HMRC has now terminated this arrangement and it is vital that churches get to grips with the consequences. Under the new arrangements churches need to act in regard to their responsibilities as employers - income tax, national insurance and workplace pensions.

The briefing paper available from the Downloads & Links box is intended to inform Parochial Church Councils of the issues relating to paying employees and their responsibilities for ensuring the correct application of HMRC guidance.
Does my PCC need to run PAYE?
From 6 April 2013 a church must now register as an employer with HMRC and operate a PAYE (Pay As You Earn) Scheme if any of the following apply,
  • they pay an employee at or above the PAYE or NI (National Insurance) Lower Earnings Limit,
  • they employ anyone who already has another job,
  • they employ anyone who is receiving a state, company, or occupational pension,
  • they provide an employee with employee benefits.
It is the responsibility of each PCC to establish who their employees are, whether they are required to register as an employer and thus whether they need to operate a PAYE Scheme. When making their determination a PCC should be aware that the level or frequency of any payment(s) is not relevent.

Once a PCC has registered as an employer, all payments to all employees - regardless of amount or frequency - must be reported to HMRC through their PAYE system.

PCC's that do not need to operate a PAYE Scheme, but do employ individuals on a regular or occasional basis, need to retain records - for the next 3 full tax years - of each employee's,
  • full name, address and NI number,
  • total amount paid over the tax year.
PCC Employee or Self-employed?
Individuals who receive money from a parish church for any reason, other than the reimbursement of allowable expenses, may be an employee of the PCC.  For example, organists, vergers, sextons and cleaners are often PCC employees.  The only exception to this are clergy (including retired clergy) who are 'Office Holders' rather than employees.

Such 'money' includes any honorarium and regular, irregular, or one-off payments.

If an individual is not already registered with HMRC as self-employed, then HMRC's anonymous Employment Status Indicator (ESI) should be used to verify the person's employment status with the PCC.
Employment Status Indicator
PAYE Software
In order for PAYE software to operate effectively it must be able to correctly connect to HMRC over the Internet.  The link below will provide a list of PAYE software that has been successfully tested by HMRC.  All the software listed should be free to use if you have 9 or less employees.
PAYE Software.

Real Time Information (RTI)
All UK employers are required to notify HMRC of any payments made to their employees at the time they pay them.  This notification is referred to as Real Time Information, or RTI.  A guide for churches can be found on the Parish Resources website and more detailed information is also published on HMRC's own website.
PAYE a Church Guide.
Every worker has the legal right to have a workplace pension.  The latest information on this issue is available through the Pensions Regulator's website.  

If your PCC is a registered employer, then you must consult the Pensions Regulator's website to determine the staging date on which you must auto-enrol all eligible workers and offer a workplace pension to any others who wish to join.  Further Church of England guidance in regard to auto-entrolment and who might provide your church with a suitable pension scheme, please refer to the Parish Resources website.