One employee feels too small for "payroll", but HMRC's rules don't scale down. A café owner taking on a first barista, a family hiring a nanny and a one-director company paying its director all run the same PAYE cycle. The good news is that with one person it takes minutes each payday once it is set up, and it can cost nothing beyond the wages and employer contributions.
Figures below are for the 2026/27 tax year (6 April 2026 to 5 April 2027) from GOV.UK.
Do you need to register for PAYE?
GOV.UK says you must register for PAYE if, in the current tax year, your employee:
- is paid £96 or more a week
- gets expenses and company benefits
- is getting a pension
- has had another job
- has received Jobseeker's Allowance, Employment and Support Allowance or Incapacity Benefit
If none applies you don't register, but you still keep payroll records. Register before the first payday to get your employer PAYE reference, and not more than 2 months before you start paying people. A limited company whose only employee is its director must register too.
Setting up: the one-off jobs
- Check the person is an employee rather than self-employed, and that they have the right to work in the UK.
- Agree pay of at least the National Minimum Wage. From April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over.
- Give the main written statement of employment particulars on the first day of work; the rest follows within 2 months.
- Get Employers' Liability insurance with at least £5 million of cover. You don't need it if the only person you employ is a close family member.
- Register as an employer with HMRC and choose payroll software.
- Check your workplace pension duties. They start as soon as your first member of staff starts work.
Each payday
GOV.UK's running payroll page lists four things to do on or before each payday:
- Record their pay: salary or wages and any other pay.
- Work out deductions: Income Tax, employee National Insurance and anything else such as pension or student loan, plus your employer National Insurance.
- Produce a payslip. GOV.UK notes you can use different software if your payroll software doesn't have this feature.
- Report pay and deductions to HMRC in a Full Payment Submission (FPS).
Then pay HMRC what you owe by the 22nd of the following month if you pay electronically. If you usually pay HMRC less than £1,500 a month, which is common with one employee, you may be able to pay quarterly instead.
The 2026/27 numbers that matter
| Item | Weekly | Monthly | Yearly |
|---|---|---|---|
| Lower Earnings Limit | £129 | £559 | £6,708 |
| Secondary Threshold (employer NI starts) | £96 | £417 | £5,000 |
| Primary Threshold (employee NI starts) | £242 | £1,048 | £12,570 |
| Personal Allowance (tax code 1257L) | £242 | £1,048 | £12,570 |
| Employer NI rate | 15% above the Secondary Threshold | ||
| Employee NI main rate | 8% above the Primary Threshold | ||
| Basic rate of Income Tax | 20% on the first £37,700 of taxable pay |
Employment Allowance cuts your employer National Insurance bill by up to £10,500 a year, which wipes it out entirely for most single employees. Two common cases can't claim it: a company whose only employee paid above the Secondary Threshold is its sole director, and someone employed for personal, household or domestic work, such as a nanny or gardener, unless they are a carer or support worker.
What one employee costs: a worked example
An employee on £18,000 a year (£1,500 a month), tax code 1257L, category A, in England, enrolled in a workplace pension at the minimum contributions:
| Line | Calculation | Amount |
|---|---|---|
| Gross pay | £18,000.00 | |
| Employer NI | 15% × (£18,000 − £5,000) | £1,950.00 |
| Employer NI after Employment Allowance, if eligible | £0.00 | |
| Employer pension (3% of qualifying earnings) | 3% × (£18,000 − £6,240) | £352.80 |
| Total cost to you, without Employment Allowance | £20,302.80 | |
| Total cost to you, with Employment Allowance | £18,352.80 |
From the employee's pay you deduct Income Tax of £1,086 (20% of £5,430 above the personal allowance), employee NI of £434.40 (8% of £5,430) and their pension contribution. You pay those deductions over to HMRC and the pension scheme; they are not an extra cost to you. Pension relief and band rules vary by scheme, so use the take-home pay calculator for the employee's actual figures.
Software: free, paid, or payslips only
You need software that reports PAYE to HMRC online. For one employee there are three common set-ups:
| Set-up | Reports to HMRC | Makes payslips | Cost |
|---|---|---|---|
| HMRC Basic PAYE Tools | Yes | Yes, saved as a PDF | Free (fewer than 10 employees) |
| Commercial payroll software | Yes | Usually | Free tiers to a monthly fee |
| Payroll bureau or accountant | Yes, for you | Yes | A monthly or per-run fee |
The cheapest route is Basic PAYE Tools: it sends the FPS, and its user guide says you can create a payslip for each employee and save it as a PDF. If you want a different payslip layout, GOV.UK allows a separate tool for the payslip.
Where PayDocs fits
PayDocs makes the payslip. Enter the period's pay. 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 your payroll software reported. Preview is free; you pay per payslip, with packs for regular paydays.
PayDocs doesn't register you with HMRC, send Full Payment Submissions or pay HMRC. Keep using Basic PAYE Tools or your payroll software for that.
Questions
Do I need to run payroll for just one employee?
Yes, if they earn £96 a week or more in 2026/27 or another PAYE condition applies, such as having another job or a pension. The same PAYE steps apply to one employee as to fifty.
Is there free payroll software for one employee?
Yes. HMRC's Basic PAYE Tools is free for employers with fewer than 10 employees. It reports to HMRC and can save a payslip for each employee as a PDF.
Can I claim Employment Allowance with one employee?
Usually, unless the one employee is your company's sole director or a domestic worker such as a nanny or gardener. Carers and support workers are an exception to the domestic rule.
How often do I pay HMRC with one employee?
Monthly, by the 22nd of the following month if you pay electronically, or quarterly if you usually owe less than £1,500 a month.
Sources
- GOV.UK: PAYE and payroll for employers (when to register)
- GOV.UK: Register as an employer
- GOV.UK: Employing staff for the first time
- GOV.UK: Written statement of employment particulars
- GOV.UK: Employers' Liability insurance
- GOV.UK: Running payroll
- GOV.UK: How to use Basic PAYE Tools, Create payslips (updated 21 July 2026)
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Employment Allowance eligibility
- GOV.UK: Workplace pensions, what you, your employer and the government pay
Sources checked 8 October 2026. This article explains how pay documents work; it is not tax or legal advice.
