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However, regardless of name, a payment for services rendered, whether classed as salary or honorarium is still income which is assessable for income tax purposes. This should not be confused with reimbursement of out of pocket expenses, which, if properly documented (with receipts etc.) would not be assessable for income tax purposes.

Whilst there are more comprehensive resources available on the Parish Resources website www.parishresources.org.uk/people/paye, it is important to be aware of situations whereby a Parish may be required by law to operate PAYE on payments made in exchange for services rendered. In order to ensure that you comply with legislation, you should first identify whether an employer/employee relationship exists.

As a general rule, if somebody works a set number of hours on a regular basis and receives payment for this, it is likely that an employment relationship arises.

However, due to the numerous arrangements in place, it is best to use the HMRC Employment Status Indicator, www.gov.uk/guidance/employment status-indicator, which will give an indication of whether an employment relationship exists. For more technical queries on employment status, it may also be beneficial to call HMRC directly on 03000 527450.

If an employment relationship exists, you should then check whether you are required to operate PAYE. The simplest way to do this is to answer the following questions:

• do you pay anyone at or above the Lower Earnings Limit (£112 per week for tax year 2015/16)?
• do you pay anyone above the PAYE threshold?
• do any of your employees have another job?
• are any of your employees in receipt of a pension?
• are you providing employee benefits?

If you have answered no to all of the above, then you will not need to run a payroll, but you must keep a record of each person’s name, address and National Insurance Number as well as the amount paid to them each year from 6th April to 5th April. These records should be kept for three years.

If you have answered yes to any of the above, then you will need to enrol all of your employees on your payroll. If this is the case, then you should:

• register as an employer, this can be done online at www.gov.uk/ register-employer
• set up a payroll. Details can be found on the government website www.gov.uk/paye-foremployers/setting-up-payroll if you have less than ten employees, then HMRC offers links to free software www.gov.uk/payroll-software/freesoftware, which can be used to administer this, or, they offer a free basic payroll tool, www.gov.uk/basic-paye-tools which you can use instead. You can of course consider using a payroll provider if preferred. However, you will most likely need to pay for this service
• ensure you are able to submit real time information returns to HMRC (the software available at the above websites should be able to do this).

Pensions and auto-enrolment

You should also consider the implications of auto-enrolment, whereby employees will by law be required to be enrolled into a pension scheme if they meet certain qualifying criteria.

The Church of England pensions department produced a guidance note in July 2015 which can be downloaded at churchofengland.org/media/2265597/automatic%20enrolment%20faq.pdf

Further information can also be found on the Church of England website, churchofengland.org/about-us/structure/cepb/pensions/automatic-enrolmentfor-employers.aspx and the pension regulator website, www.thepensionsregulator.gov.uk/employers.aspx