A new employer needs to register with HMRC as an employer and operate a PAYE scheme and make important checks on each new employee recruited and complete the initial paperwork to set up the employees pay records of tax national insurance and personal details and inform HMRC the employee has started.

Initial P45 checks for PAYE and new employee pay status

Taking on a new employee is a relatively simple process but if errors are made they can be costly. Most of the initial information required to set up the PAYE records are contained in the P45 tax form the employee should present to a new employer. If a P45 form is not available then the employee should be given a P46 and asked to complete it.

Important checks include determining the new employee tax status as an employee rather than self employed. Always adopt an approach of employee unless the new recruit specifically provides services only and there is an agreement stating those services and none of the rules that could indicate potential employee status are present.

There are numerous rules that destroy the self employed status such as using business tools rather than own, taking a company vehicle home at night, working for one employer and many others. If anyone self employed is later determined to be an employee the money paid to them, the employees pay, would be regarded as net wages not gross with the employer responsible for the income tax national insurance contributions employees and employers which had not been deducted, interest and penalties too..

One important payroll check if there is a gap in the paperwork is to make certain the new recruit can be legally employed. If there are any doubts, missing information such as previous work history or lack of a national insurance number then contact the job centre to determine the employment status.

If the new employee is from outside the UK, it is the employer responsibility to ensure that they are entitled to work before they start working for you. The government has recently introduced checks employers must make on all new employees as a safeguard from employing someone illegally.

Checking the P45 form of a new employee

The P45 tax form is in 4 parts and is the record of the cumulative gross pay and income tax deducted to date in the tax year and forms the basis for the PAYE record. The previous employer sends part 1 to HMRC PAYE tax office when that employee leaves and has a legal responsibility to give the employee parts 1A, 2 and 3. The employee retains part 1A and gives the new employer parts 2 and 3 to calculate the employee tax.

In receipt of parts 2 and 3 the new employer should check the national insurance number is entered, and that the gross pay and income tax shown on part 2 agree with the same amounts entered in part 3. The new employer should also check the income tax deducted is correct according to the gross pay received at the employee date of leaving. The new employer then retains part 2 for a minimum of 3 years after the financial year and completes part 3 and sends it to the PAYE tax office immediately.

If the P45 form shows the wrong tax deduction, calculate the correct tax and enter it on part 3 which is sent to HMRC. The correct tax calculated entered on part 3 should be used in the new employer PAYE system and not the erroneous figure on part 2 of the P45 form. Employers can submit the P45 online, in fact from April 2009 all employers with over p45 must do so and other employers will also do so by 2011.

New employee doesn’t have a national insurance number

If a new employee does not have a national insurance number apply a temporary number, say AB123456C can be used until the correct number is obtained. Records must be kept of the employee name, address, date of birth, gender, all payments made and deductions and immediate action taken to obtain the national insurance number.

If the employee has never had a national insurance number they must contact the job centre to obtain one. If the employee has had a national insurance number but lost it the employer should ensure the P46 details are accurate so the employee NI number can be traced by HMRC who will then notify the new employer in due course.

If a new employer cannot obtain the employee national insurance number apply for a form CA6855 which has to be completed and submitted to the national insurance contributions office to trace the number.

I’m not against National Health Insurance.

As an experienced Health Insurance agent you would think I would hate it, but I don’t.

Here’s why:

1. America is all about freedom of choice.

An intelligent national plan will not eliminate choice. Think of Medicare. It’s national, it’s automatic (you get Medicare at age 65 whether you apply or not), but you can still choose which Medicare supplement you want if any. You can even stay employed and not take Medicare until you really retire.

2. Getting the uninsured people under some kind of coverage would save us all money.

People without insurance cost us all money. Think of the uninsured drivers (there are plenty) you hit drivers, causing accident or injury and who pays the cost? We do, in higher rates for those of us who buy.

3. Health Insurance today is not portable.

Move from state to state, go ahead, but don’t plan on taking your Health Insurance with you. For one thing, the carrier you have may not offer coverage in your new state.

Leave your job, go ahead, but you have 18 to 36 months of COBRA, and then you had better be insurable, or you won’t get coverage again unless you find a job with group coverage.

Now let me modify my approval a bit. I don’t like Single Payer without competition. The ability to choose your own plan, or supplement to the National plan.

Here’s why:

1. Rationing, see here…

If you have no choice, well, you have no choice. The videos at Freemarketcure.com do a good job of illustrating that nightmare.

2. Higher costs.

If you take away competition (choice) Health Care costs will escalate even faster.

Take a procedure that has dropped in cost for the last few years, Laser Eye Surgery. It isn’t covered by most health plans, so people must pay out of pocket. The cost has dropped over 50%!!!

Why?

Competition, and consumer choice. You can select where you want to go to Laser your Eyeballs, and you can shop for value.

Summary:

So, here is a list of things that Obama, Hillary, McCain or whoever wins can do.

1. Make COBRA permanent.

If you can’t work, but you can manage make your insurance payment, why should you lose the coverage?

It isn’t fair, you joined the insurance pool, you paid your dues, you drew the short straw and got sick or injured, so now (under current law) you only get 18 to 36 months to get better or you lose the care?

Shame!

That is my personal number 1 peeve!

2. Make any National Plan open to competition from plans that offer equal or better benefits and let the shopper choose!

3. Get on with it! We know what you want to do, be bold, be balanced (especially with our budget!) and propose something, we are ready!

You may wonder why should you know your car insurance companies. One very good reason is that in the event of an accident you would be less likely to accept a false proof of insurance. How’s that possible?

A few months ago my car was hit while I was sitting at a stop sign waiting to turn left. The other driver coming from my right cut the corner before realizing there was a car there. Needless to say it was a head-on collision, but thankfully she was slowing to turn.When the time came to exchange insurance information, she handed me a letter on official letterhead that gave a policy number for auto insurance.  The letterhead said “DriveTime”. I’d heard about DriveTime as being a place where one could easily get an auto loan.  I never questioned the validity of the “proof” of insurance I was given.

I found out later, when I tried to file a claim for repairs with the other insurance company, that DriveTime insurance ONLY covers their car.  It is a comprehensive coverage that protects DriveTime against any loss. However, it is up to the car buyer to obtain liability coverage from another source.

So before you get stuck with a “proof of insurance” that is no proof at all, glance at the list below just to get an idea of those real full-coverage auto insurance companies. These are American insurance companies with a strong regional and national presence.

* American National Insurance Company

* American Automobile Association

* AIG

* Allstate

* American Family Insurance

* American Farmers and Ranchers Mutual

* Amica

* Auto-Owners Insurance

* California Casualty Insurance

* CapitalOne

* Commerce Insurance Group

* COUNTRY Insurance & Financial Services

* Cuna Mutual Group

* Electric Insurance Company

* Esurance

* Expatriate Insurance

* Farm Bureau Insurance

* Farmers Insurance

* Frankenmuth Mutual Insurance Company

* GAINSCO Auto Insurance

* GMAC Insurance

* Geico

* The General

* GuideOne

* Hanover Insurance

* The Hartford

* Hastings Mutual Insurance Company

* Haulers Insurance Company

* Infinity Auto Insurance Company

* Liberty Mutual

* Nationwide Insurance

* National Interstate

* Metropolitan Life Insurance Company

* Mutual of Enumclaw

* OneBeacon Insurance Group

* Pekin Insurance

* Pemco

* Progressive

* Safeco

* Safeway Insurance Group

* Standard Insurance Company

* State Auto Insurance Companies

* Shelter Insurance Companies

* Solid Insurance Group

* State Farm Mutual Automobile Insurance Company

* The St. Paul Travelers Companies, Inc.

* Trustgard Insurance

* Unitrin Direct Auto Insurance

* USAA

* Wawanesa

* Westfield Insurance

Of course, there are a lot more insurance companies that this, but this is a list of the most common. So if someone gives you a proof of  insurance that doesn’t sound like a company name that you are familiar with, make sure you get all of the contact information, including their driver’s license number…just in case.