PAYE (Pay As You Earn) is how employers collect income tax and National Insurance from employees' pay and pass it to HMRC. This post covers getting into the system: whether you need to register, when, and the steps from registration to the first payment to HMRC. If you are weighing up the cost of payroll for a single employee, our post on payroll for one employee compares the options.
Do you need to register as an employer?
GOV.UK says you must register if you do any of these:
- pay any employees, including company directors, £129 or more a week
- employ anyone who is getting a pension or already has another job
- provide expenses or benefits to employees, including directors
- use subcontractors under the Construction Industry Scheme, or reclaim CIS deductions
£129 a week is the 2026/27 Lower Earnings Limit for National Insurance (£559 a month, £6,708 a year). You also register if you are only employing yourself, for example as the only director of your company. If none of these applies you don't register, but you still keep payroll records.
When to register
Register before your first payday, so you have your employer PAYE reference when you need it. You can't register more than 2 months before you start paying people. Limited companies with 1 to 9 directors can register online; other employers answer a few questions on GOV.UK to find their route.
HMRC sends your references by letter. It doesn't promise a fixed number of days on the registration page; its "check when you can expect a reply from HMRC" tool shows current times. If payday comes before the letter, GOV.UK says to run payroll anyway, store the Full Payment Submission, and send it late once you have the reference.
What you get from HMRC
| Reference | Looks like | Used for |
|---|---|---|
| Employer PAYE reference | 123/AB456 | Identifying your PAYE scheme: payroll software, P60s, HMRC letters and calls |
| Accounts Office reference | 123PX00123456 (13 characters) | Paying HMRC what you owe |
Our post on the employer PAYE reference vs the Accounts Office reference explains where to find each one later.
Before the first payday
- Get employers' liability insurance from the day you become an employer: at least £5 million of cover. GOV.UK says the fine is £2,500 for every day you aren't properly insured. Employing only family members is exempt.
- Check the person has the right to work in the UK.
- Choose payroll software that reports to HMRC online. HMRC lists recognised software but doesn't recommend one product over another.
- Collect the employee's information: their P45 or, if they don't have one, HMRC's starter checklist, plus date of birth, gender, address and start date.
- Check your workplace pension duties: you must enrol staff aged 22 to State Pension age who earn at least £10,000 a year and normally work in the UK.
- Enrol for PAYE Online so you can see what you owe and manage your PAYE account.
Running PAYE each payday
Each payday you record pay, deduct income tax and National Insurance (plus any student loan and pension contributions), and report it to HMRC on a Full Payment Submission on or before the payday. You choose how often you pay staff.
| Task | Deadline |
|---|---|
| Report pay and deductions (Full Payment Submission) | On or before each payday |
| Pay HMRC electronically | By the 22nd of the month |
| Pay HMRC by post | By the 19th of the month |
| Pay quarterly instead | Allowed if you expect to pay HMRC less than £1,500 a month; arrange it with HMRC |
| Give P60s | By 31 May after the tax year |
Employer National Insurance is 15% of each employee's earnings above the secondary threshold of £5,000 a year (£96 a week) in 2026/27, paid with the PAYE you deducted.
Mistakes new employers make
- Waiting for the registration letter before paying staff. Pay them on time; GOV.UK lets you send the payroll report late once the reference arrives.
- Reporting after payday. The Full Payment Submission is due on or before the payday it covers, every time you pay.
- Paying HMRC with the wrong reference. Payments use the 13-character Accounts Office reference, not the employer PAYE reference; GOV.UK warns a wrong reference can delay a payment or put it against a different tax bill.
- Starting without employers' liability insurance. It is needed from the day you become an employer, unless you only employ family members.
- Forgetting the pension. Check your automatic enrolment duties when the first person starts: staff aged 22 to State Pension age earning £10,000 or more a year must be enrolled.
- Losing the starter information. Keep P45s and starter checklists with your payroll records for the current tax year plus 3 more.
Where PayDocs fits
PayDocs doesn't register you with HMRC or send submissions; your payroll software does that. It makes the documents you give staff: a payslip each payday and a P60 after the tax year. PayDocs works out PAYE income tax, National Insurance and supported deductions for 2026/27 pay dates. Every line is editable, so the payslip matches what you reported.
This is general information about HMRC rules for the 2026/27 tax year, as published on 7 October 2026. It is not tax or legal advice.
Questions
Do I need to register as an employer for one employee?
Yes, if you pay them £129 a week or more in 2026/27, or they have another job or a pension, or you give them expenses or benefits. A director who is the company's only employee counts too.
How early can I register as an employer?
No more than 2 months before you start paying people. Register before the first payday so your employer PAYE reference arrives in time; if it doesn't, you can still pay staff and report late.
When do I pay PAYE to HMRC?
By the 22nd of the month if you pay electronically, or the 19th by post. If you expect to pay less than £1,500 a month you can arrange to pay quarterly.
What if my first payday comes before HMRC's letter?
GOV.UK says to run payroll and pay your employee on time, store the Full Payment Submission, and send it as a late submission once your employer PAYE reference arrives.
Do I need payroll software?
You must report pay to HMRC online on or before each payday, which in practice means HMRC-recognised payroll software, unless you are exempt from online filing.
Sources
- GOV.UK: Register as an employer
- GOV.UK: Register as an employer, who needs to register
- GOV.UK: PAYE and payroll for employers
- GOV.UK: PAYE and payroll for employers, setting up payroll
- GOV.UK: Running payroll, paying HMRC
- GOV.UK: Payroll software
- GOV.UK: Employers' liability insurance
- GOV.UK: Workplace pensions, what employers must do
- GOV.UK: Employing someone to work in your home, nannies
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Payroll, annual reporting and tasks
Sources checked 7 October 2026. This article explains how pay documents work; it is not tax or legal advice.
