Downloads: Employer National Insurance

If you employ staff you’re legally required to account to HMRC for both employer National Insurance contributions and employee NI and PAYE. Here’s how to lawfully use a corporate Taxation Trustif you’re running a limited liability business to ensure these contributions and deductions are not employed to support illegal wars.

Step 1: Understand your legal duties
While you are required to transfer PAYE and both employer and employees NI to HMRC, you also have the duty to obey the law and object to the unlawful use of those taxes. By withholding tax, you are not breaking the law; you are upholding it.

You do though have a dilemma. Strictly speaking you may withhold your employees’ PAYE and NI without informing them until after the end of the tax year. At that point you can transfer what you have withheld to each employee and give them the choice of transferring this to HMRC or joining you in the No Tax For War campaign. The better option is to let them know upfront what you’re doing and why — just point them towards this website! Anyone who chooses not to get involved can forward to HMRC the withheld tax funds you transferred into their bank after the tax year end on 5 April. 

Step 2: Explore options
If a staff member has already submitted their Taxation Trust deed to you, you can pay their PAYE and employee NI into that. A better option is to set a business-wide Taxation Trust covering all your employee and employer PAYE and NI contributions as well as other tax-related outgoings such as Corporation Tax, VAT, and business rates. As a fiduciarythis is the best option for you as well as for your employees. 

Step 3: Set up your business Taxation Trust
If your business is incorporated as a limited company, select the Corporate Trust template for your UK location. Follow the same procedure as for your Corporation Tax — personalise, sign, get witnessed, and store securely. Send a copy — not the original — to HMRC.

Step 4: Set up your ring-fenced business account
You must open a separate business bank account to ring-fence your employee and employer PAYE and NI commitments. There can be no mingling with everyday business income and outgoings.

For a business that is not a limited liability company, you’ll still need to withhold the funds in a separate business account opened specifically for this purpose. Whatever transfers you previously made to HMRC are now instead directed into this account.

Step 5: Notify HMRC
Use the employer letter template to explain your lawful position. Use Royal Mail’s signed-for service so you have a record of delivery.

Step 6: Keep records
Maintain a full paper trail of your exchanges with HMRC. Keep digital and printed copies of all correspondence, dates, receipts, and tracking numbers.

Step 7: Year-end review
At your year end — usually 5 April or the end of your tax year — your trustee(s) write to HMRC to inform them that the conditions have not been met and that tax due is rescinded. Notify HMRC that your employees may send the tax and NI you withheld on their account and — at the end of the tax year — thus has been forwarded to them to dispose of as they see fit.

We go into much greater detail about this process in Setting Up a Corporate Trust, which is also included in the downloads packs.