You must register as an employer with HMRC before your first payday if you're employing anyone. This applies whether your employee works full-time, part-time, temporarily, or casually.
When you must register
Register if you employ someone and:
- Pay them £96 or more per week (2026/27 threshold)
- Give them expenses or benefits
- They have another job or receive a pension
- They're on a contract lasting longer than one week
Start 4 weeks before first payday to allow time for HMRC to send activation codes by post.
What you'll receive after registration
- PAYE reference number
- Format: 123/AB45678 - Received immediately online, use for all payroll submissions
- Accounts Office reference
- Separate 13-character reference for HMRC correspondence about your PAYE account
- Employer PAYE activation code
- Posted within 10 working days - needed to file online and access your PAYE account
- Online account access
- Sign in with Government Gateway - view PAYE account, file returns, make payments
Setting up payroll
After registration, you must:
1. Choose payroll software
Use HMRC-approved Real Time Information (RTI) software to:
- Calculate tax and National Insurance
- Submit Full Payment Submission (FPS) to HMRC on or before each payday
- Track employee records and statutory payments
Popular options: Xero Payroll, QuickBooks Payroll, Sage Payroll, FreeAgent, BrightPay (free for up to 3 employees).
2. Submit Full Payment Submission (FPS)
On or before each payday: Submit FPS telling HMRC how much you're paying employees and how much tax/NI you're deducting.
Late submission penalty: £100 per month (1-50 employees), escalating for larger employers.
3. Pay HMRC monthly
By 22nd of following month (19th if paying by post): Pay all tax and National Insurance deducted from employees, plus employer NI.
Late payment penalty: Charges and interest apply.
Ongoing employer obligations
Once registered, you have regular reporting and payment duties to HMRC:
-
Submit FPS on or before each payday
Real Time Information (RTI) requires you to report payroll information to HMRC on or before paying employees. Late submission penalty: £100/month for small employers.
-
Pay HMRC monthly by the 22nd
Pay all tax and National Insurance deducted from employees, plus employer NI, by the 22nd of the month following payday (19th if paying by post). Late payment incurs interest and penalties.
-
Provide payslips on or before payday
Give employees itemised payslip showing gross pay, deductions (tax, NI, pension, student loan), and net pay. Can be printed or electronic.
-
Issue P60s by 31 May
Provide P60 annual summary to all employees who were on payroll at 5 April, showing total pay and deductions for the tax year.
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Submit P11D by 6 July (if applicable)
If you provide expenses or benefits (company car, medical insurance, private fuel), report them to HMRC on form P11D. Also submit P11D(b) for Class 1A National Insurance.
-
Keep payroll records for 3+ years
Maintain records of pay, tax, NI, statutory payments (SSP, SMP), and employee details for at least 3 years after end of tax year they relate to.
Employment Allowance
You can claim Employment Allowance to reduce your employer National Insurance bill by up to £10,500 per year (from April 2025, up from £5,000).
Eligibility
You can claim if:
- You employ at least one person (other than yourself if director/sole trader)
Cannot claim if:
- You're the only employee and also director/owner
- You employ someone for personal, household, or domestic work
From April 2025, the previous £100,000 NI liability threshold was removed — all eligible employers can now claim regardless of their NI bill size.
How to claim: Claim through your payroll software when submitting first EPS (Employer Payment Summary) of tax year.
- Employment Allowance 2026/27
- £10,500 per year (increased from £5,000)
- Eligibility threshold
- No NI liability cap from April 2025 — all eligible employers can claim
- Claim method
- Via payroll software when submitting EPS
- Saving for small employer
- Can reduce employer NI bill to zero if you employ 1-2 people
Legal basis
Primary legislation and key regulations
Official guidance
Register as an employer (opens in a new tab)
HMRC online registration for PAYE.
HMRC
PAYE and payroll for employers (opens in a new tab)
Managing PAYE, filing returns, making payments.
HMRC
Real Time Information (RTI) (opens in a new tab)
How to run payroll and submit FPS.
HMRC
Find payroll software (opens in a new tab)
List of HMRC-approved payroll software.
HMRC
Employer National Insurance rates (opens in a new tab)
Current employer NI rates and thresholds.
HMRC
Employment Allowance (opens in a new tab)
Reduce your employer NI bill by up to £10,500.
HMRC