How to register as an employer with HMRC: A step-by-step PAYE guide

You register as an employer by submitting an application online via the GOV.UK portal, choosing compliant payroll software, and collecting tax-related information from your staff via a Starter Checklist. Once set up, you must run payroll on or before every payday, submit a Full Payment Submission (FPS) to HM Revenue and Customs (HMRC), and pay any collected deductions and employer National Insurance contributions monthly.

Key takeaways: Setting up UK PAYE at a glance

• Registration with HMRC must occur before your first payday and can be done up to two months in advance.
• A payroll scheme is legally required if any employee, including a limited company director, earns at least £129 per week for the 2026/27 tax year.
• Employers must calculate and deduct income tax, employee National Insurance, and calculate 15% employer National Insurance above the £5,000 yearly Secondary Threshold.
• Monthly PAYE and National Insurance payments are strictly due to HMRC by the 22nd day of the following calendar month when paying electronically.

How do I register as an employer for PAYE and set up payroll?

Setting up PAYE involves executing six distinct steps to establish compliance, retrieve government references, collect personnel data, calculate deductions, pay taxes, and arrange workplace pensions.

1. Register online with HMRC via GOV.UK to secure your unique Employer PAYE Reference and Accounts Office Reference.
2. Choose and set up an HMRC-recognised payroll software package that supports Real Time Information (RTI) requirements.
3. Collect personal details and former tax histories from all new staff members using a standard Starter Checklist.
4. Run your payroll on your schedule, issuing employee payslips and sending a Full Payment Submission (FPS) on or before each payday.
5. Submit and pay all collected income tax, employee National Insurance, and employer National Insurance to HMRC by the deadline.
6. Establish a compliant workplace pension scheme and automatically enrol eligible employees who earn more than £10,000 annually.

When do you need to register as an employer with HMRC?

You must register as an employer before your first payday if you pay at least £129 per week to any worker.

According to HMRC guidance, the compulsory registration threshold is triggered as soon as an employee or director receives earnings equal to or greater than the Lower Earnings Limit, which is set at £129 per week for the 2026/27 tax year. This legal requirement applies equally to full-time staff, part-time employees, and limited company directors who pay themselves a regular salary.

Employers must initiate their registration as soon as a job offer is made, rather than waiting for the employee to start working. Processing applications can take between 5 to 15 working days, and employers are allowed to register up to a maximum of two months before payments commence to ensure their systems are configured in time.

Step 1: Register online with HMRC

Employers can register online using the GOV.UK registration service using their pre-existing Government Gateway credentials.

During the online registration process, you must supply specific business data including the registered business name, trading address, the nature of your business activities, the expected total of employees, and the planned first pay date. Upon successful registration, HMRC will send you two distinct reference numbers which serves different operational functions.

Step 2: Choose your HMRC-recognised payroll software

Employers must select payroll software that integrates fully with Real Time Information (RTI) data systems.

RTI compliance dictates that electronic reports must be transferred to HMRC on or before every single payday. Employers can select free tools, such as HMRC's Basic PAYE Tools which is available for organisations with 10 or fewer workers, or invest in commercially supported payroll software packages to automate income tax, National Insurance calculations, and statutory benefit rates.

Step 3: Collect essential details from your new employee

Gathering accurate onboarding information is required to verify tax codes and national identity records before payroll runs.

In the UK payroll system, the previous reliance on P45 and P46 physical documentation has transitioned to digital screening. Employers must collect the following details using a Starter Checklist:

• The employee's full legal name, current home address, and date of birth.
• The employee's National Insurance number to trace contributions.
• A completed Starter Checklist to select the correct temporary tax code.
• The employee's bank card details to prepare electronic BACS payments.

Step 4: Run your first payroll and submit an FPS

Running payroll involves calculating wages and deductions, then filing a Full Payment Submission (FPS) inline on every payday.

The payroll run calculates gross pay, deducts individual employee income tax using their assigned HMRC tax code, and deducts employee National Insurance contributions. Additionally, employers must calculate employer National Insurance contributions, which are set at a rate of 15% on any earnings above the Secondary Threshold of £5,000 per year for the 2026/27 tax year.

If the official PAYE references have not arrived by the time your first payday occurs, you must still run your processes as scheduled. In this scenario, you should process payroll manually, store the resulting FPS files, and submit them online as a late filing once HMRC delivers your reference numbers.

Step 5: Pay tax and National Insurance to HMRC

Paying HMRC involves transferring collected income taxes and employee-employer contributions in a timely manner.

Employers paying HMRC electronically must ensure funds clear by the 22nd day of the following calendar month. It is critical to quote the Accounts Office Reference when completing the transfer, as failing to provide this accurate reference or missing the deadline will attract interest and financial penalties.

Step 6: Set up workplace pension auto-enrolment

Auto-enrolment requires employers to arrange and register a workplace pension scheme on behalf of qualified personnel.

Under UK workplace pension rules, employers must enrol any staff member who is aged between 22 and the State Pension Age, of which earns at least £10,000 per year. The scheme layout dictates minimum contributions consisting of 3% provided by the employer and 5% deducted from the employee. This pension setup must be active starting from your employee's first official day of work.

What are the key PAYE and payroll rates for 2026/27?

The key statutory rates and administrative thresholds for the 2026/27 tax year dictate payment standards and tax deductions.

How long must payroll records be kept in the UK?

Employers must retain all statutory payroll records for at least 6 years.

Under standard HMRC tax rules, failure to maintain historical payroll documentation can result in substantial regulatory penalties. Employers are legally obligated to securely archive records containing gross pay, tax deductions, National Insurance contributions, student loan payouts, and historical Real Time Information (RTI) submissions for at least 6 tax years after the end of the tax year they relate to.