PAYE23036 | Employer records: employer types: school funding arrangements (Action Guide)
From HM Revenue & Customs · PAYE Manual
If you are required to open a PAYE scheme for a LEA school that has opted to hold the funds for its own payroll, follow steps 1 - 2 below.
For details of how to access any of the Employer Business Service functions, use PAYE057.
1. If you receive notification that a school has opted to hold the payroll funds, and pay their staff direct
Use Function EMPLOYER SET UP to open a new employer record.
2. Write to the school and advise them
That a new employer record has been opened
The office number and references allocated
That details of the employees affected should be forwarded, with any form(s) P45(3) held