CHANGES to the Pay As You Earn (PAYE) tax system, requiring
employers to make immediate notification to HMRC of payments to
News, 15 March), have highlighted confusion about the status of
some church workers.
Generally, if people are paid for services - including cleaning,
bell-ringing, organ-playing, or singing in a choir - they are
either employees or self-employed.
The self-employed provide invoices, and are responsible for
their own National Insurance and tax payments. In contrast,
employees have tax deducted at source; and, under the new Real Time
Information (RTI) system, employers are required to notify HMRC
each time a payment is made.
The new system does not change anybody's status; but it has led
many to question whether the correct statuses were being
A number of dioceses have organised briefings to help churches
understand the new system. This had resulted in the diocese of
Chester's having a public spat with the journal The Ringing
World about the status of bell-ringers.
"No one with any knowledge of employment law thinks the Chester
diocesan office is right, but all attempts at persuasion have been
unsuccessful," Steve Coleman wrote in The Ringing World.
"The office takes the view that HMRC have told them that
bell-ringers are employees and that's that."
But the Diocesan Secretary for Chester, George Colville, has
rebutted the claim in a letter on the journal's website. "Talking
about tax inevitably leads to questions about employment status. .
. Parishes, bell-ringers, and others have been attempting to get us
to state categorically that bell-ringers are not employees. We are
not in a position to do this, and in response we have referred to
Local Religious Centres (LRCs) that make only very small ad hoc
payments to a limited number of workers below set levels may not
have to comply with RTI reporting requirements. The LRC arrangement
was agreed with the HMRC and the Churches Legislation Advisory
Service (CLAS) before RTI came into being.
HMRC has been unable to confirm that LRC arrangements still
stand, more than two weeks after first being asked by the
Church Times. In response to questions, their web page
giving details of the arrangement has been "removed temporarily
pending updated guidance".
The secretary of CLAS, Frank Cranmer, said that it had been in
continued discussions with HMRC about LRCs. The arrangement
continued, and CLAS was awaiting updated guidance.
THE main change is that, from their first pay day on or
after 6 April, every time an employer makes a payment to an
employee, they must report details of the earnings and deductions
to HM Revenue and Customs (HMRC).
This applies to all employers required to operate a PAYE
scheme. Guidance on when and how to register as an employer has not
changed and can be found at: www.hmrc.gov.uk/payerti/getting-started/register.htm.
Employers who are required to operate PAYE schemes must
report earnings and deductions for all employees, including those
who are part-time, who earn less than the lower-earnings limit, and
casual workers, even if those amounts are below £109 a
Many churches already operate PAYE schemes and use
payroll software. They should check with their software provider to
ensure that the software they use is RTI-compliant. There are
details of various software products at www.hmrc.gov.uk/efiling/paye/paye_software_forms.htm,
including HMRC's free Basic PAYE Tools. This is suitable for
employers with nine or fewer employees.
Until 5 October this year, employers with fewer than 50
employees, who find it difficult to report every payment to
employees at the time of payment, may send information to HMRC by
the date of their regular payroll run - but no later than the end
of the tax month in which the payments are made. (A tax month
always ends on the 5th of a calendar month.) This is a temporary
relaxation to give some extra time to small businesses that pay
weekly, fortnightly or more frequently, but who only run their
payroll (or use an agent to run their payroll) at the end of the
This extra time will enable these businesses to adapt
their processes, or change their arrangements with their payroll
service supplier so that they can comply with the new legislation.
Employers who choose to take advantage of this relaxation will
still need to report their PAYE in real time by the last pay day in
the month, or the end of the tax month (i.e. the 5th) at the
There is further detailed guidance about reporting PAYE
in real time at www.hmrc.gov.uk/rti.
HMRC has a helpful tool on its website, the Employment
Status Indicator, which will help a church determine whether a
worker is self-employed or an employee.
The tool is anonymous; so no personal details about the
worker or the church are needed. Visit www.hmrc.gov.uk/calcs/esi.htm.
HMRC's employer helpline (08457 143143) is open from 8
a.m. to 8 p.m., Monday to Friday, and from 8 a.m. to 4 p.m. on