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HMRC internal manual

PAYE Manual

Employer records: employer types: local religious centres (LRCS)

From 6 April 2013 the special arrangement negotiated with the Church’s Main Committee (now the Church’s Legislative Advisory Service) which had been in place for local religious centres (LRC), (for example a parish church), is no longer appropriate and therefore will no longer apply.

The arrangement had applied to LRCs who only paid employees less than £100 per year or over £100 per year but less than the National Insurance Lower Earnings Limit.

The rules on when to register as an employer and report PAYE information in real time are applicable to all employers. Consequently, an LRC will need to register as an employer and report PAYE in real time if any of the following apply

  • The LRC is paying an employee at or above the PAYE threshold
  • The LRC is paying an employee at or above the National Insurance Lower Earnings Limit
  • The employee already has another job
  • The employee is receiving a state, company or occupational pension
  • The LRC is providing the employee with employee benefits

An LRC guide to PAYE (Word 50KB) has been produced and can be printed locally if you receive an enquiry from an LRC. A of this guide is shown below.

Examples of such payments may include

  • Payments to casuals
  • Fees

LRC’s no longer need to provide information to the PAYE Employer Office to determine whether any further action is necessary if they pay someone more than £100 per tax year but less than the National Insurance Lower Earnings Limit. Instead they will need to establish whether they are required to report PAYE information in real time in accordance with the rules above for registering as an employer.

If they are required to register as an employer then they will need to report all payments made to their employees irrespective of the amount they pay.

Text version

This guide to PAYE / NIC for Local Religious Centres (LRC) tells you what to do when you make payments to an employee.

  1. National Insurance and tax thresholds
  • For details of thresholds go to GOV.UK/HMRC homepage for operating PAYE in real time

For example for 2013-14 tax year: the lower earnings limit for Class 1 National Insurance (NI) is £109 per week (£473 monthly) and for tax it is £182 weekly (£787 monthly)

  • If you pay someone below these thresholds follow step 3 below
  1. If you will pay anyone at or above the National Insurance threshold
  • You will need to register with HMRC as an employer (if you are not already registered) and operate Pay As You Earn (PAYE) in real time
  • This means that you will need to report the payments you make to all your employees irrespective of how much you pay them including those you pay below this threshold
  • You can now register as an employer by using the online tax registration service. This can be found at
  • Comprehensive guidance on getting started as a new employer as well as providing you access to help and support can be found at
  1. If you pay anyone below the National Insurance threshold

Note: If you are already required to register with HMRC as an employer and operate PAYE then you must not follow this step even if you pay that person below this threshold.

Instead you will have to report the payments you make to all employees in accordance with step 2.

Otherwise, use the guidance below to decide what action to take.

a. Do you expect to pay that person below the lower earnings limit during the tax year (6 April to 5 April)?
   
  * Yes - Go to b below
  * No - Follow step 2 above
b. Does that person have another job or receive a pension?
  * Yes - Follow step 2 above
  * No - Go to c below
c. Keep a record showing
  * Name, address and National Insurance number
  * The amount paid each year from 6 April to 5 April
  * Retain the records for 3 tax years following year of payment

Expense Payments

  1. No tax charge will arise in respect of a payment
  • To compensate, without profit, someone who incurs expenses which are allowable as tax deductions, when working for the LRC
  • That reimburses, without profit, the cost of travel to and from the LRC, provided this is the only payment made

The cost of travel to and from the LRC is not an allowable expense, if it is paid along with a fee for work that is done there. So a payment made to compensate for travel to or from the LRC must be included with other payments when arriving at the amount to report for PAYE purposes.

  1. Employment status of, for example, church organists, bell ringers or choristers
  • If you are in doubt about whether the person (worker) is an employee (the worker may claim to be self employed)
  • Use the Employment Status Indicator (ESI) tool to help you decide. The tool is anonymous so no personal details about the worker or the LRC are needed
  • The tool is available on the HMRC website at http://www.hmrc.gov.uk/calcs/esi.htm

Registering as an employer

They can do this by registering online or by contacting the New Employer Helpline on 0300 200 3211.

No reporting requirement

Where there is no requirement for an LRC to report PAYE information in real time then records of those payments made to an individual must be retained by the LRC for 3 complete tax years following the tax year to which the payments relate.