Before your first payday: register a PAYE scheme with HMRC (before the first payday, and not more than two months early), enrol for PAYE Online through the Government Gateway, and get HMRC-recognised RTI payroll software.
For each new starter: work out the tax code (from a P45, or an emergency code where there isn't one), capture their National Insurance number and student-loan plan, assess the auto-enrolment duty and set up a qualifying pension, and give the written statement of employment particulars on day one.
From the first payday: send the first Full Payment Submission on or before payday, then pay HMRC what you've deducted by the 22nd of the next tax month (19th if you pay by post).
UK payroll setup sits mainly across two bodies: HMRC (your PAYE scheme, RTI filing and the tax and National Insurance you deduct and pay over) and The Pensions Regulator (workplace pensions and auto-enrolment), with a day-one employment-law duty — the written statement — running underneath. The checklist below groups every setup task by when you need it, and each item links to a fuller explainer.
You normally register as an employer when you start employing staff, and you must register before the first payday to get your employer PAYE reference — but you cannot register more than 2 months before you start paying people. You must register even if you only employ yourself, for example as the only director of a limited company. Most limited companies can register online, and registering yields two IDs: the employer PAYE reference (used on every FPS and EPS) and the Accounts Office reference (the payment reference when you pay HMRC).
GOV.UK — Register as an employer →Registering online automatically enrols you for PAYE Online. HMRC then posts an activation code within 10 days, and you must activate the service within 28 days of the date on the letter or you'll have to enrol again. PAYE Online is where you check what you owe, see tax-code and student-loan notices, and get late-reporting alerts.
GOV.UK — PAYE Online for employers →You must get payroll software that reports PAYE information online, unless you're exempt. Choose from software that is recognised by HMRC — meaning you can use it to report PAYE online; HMRC cannot recommend one product over another and isn't responsible for problems with software you buy. Businesses with fewer than 10 employees can use HMRC's own free Basic PAYE Tools.
GOV.UK — Find payroll software recognised by HMRC →Use the new starter's P45 to set their tax code where they have one. Where they don't, an emergency tax code applies — codes ending W1, M1 or X, which are worked out on that week or month only rather than cumulatively. HMRC tells you and the employee the correct code, and will send an updated code within 15 working days if it needs to change.
GOV.UK — Emergency tax codes →Record the new starter's National Insurance number — one of the details you report on their first FPS. Work out whether they're repaying a student or postgraduate loan and on which plan type: if you know a plan applies but not which, HMRC's guidance is to use Plan 5 in your payroll software until you get a start notice (SL1). A postgraduate loan can run at the same time as a Plan 1, 2, 4 or 5 loan.
GOV.UK — Special rules for student loans →Your workplace-pension legal duties begin on the day your first member of staff starts work — the duties start date. You must automatically enrol any worker aged between 22 and State Pension age who earns at least £10,000 a year and ordinarily works in the UK, into a qualifying scheme, with minimum contributions of 8% of qualifying earnings (at least 3% from you). Set the scheme up with The Pensions Regulator before that first payday.
The Pensions Regulator — New employers →From day one, an employer must give a worker a written statement of employment particulars — a single document covering the core terms, given not later than the beginning of the employment (the principal statement on the first day). It's a statutory right under the Employment Rights Act 1996, section 1; it is not the employment contract itself.
GOV.UK — Written statement of employment particulars →Report pay and deductions to HMRC in a Full Payment Submission (FPS) on or before the employee's payday. As a concession, HMRC won't charge a late-filing penalty if you're a new employer and send your first FPS within 30 days of paying an employee. If your PAYE reference hasn't arrived yet, run payroll, store the FPS and send it late once the reference comes through, using late-reporting reason code G.
GOV.UK — Running payroll: reporting to HMRC (FPS) →Pay your PAYE bill to HMRC by the 22nd of the next tax month if you pay electronically, or by the 19th if you pay by post. If you usually pay less than £1,500 a month you may be able to pay quarterly. Separately, deducted workplace-pension contributions must reach your scheme by the 22nd (19th by cheque) of the next month.
GOV.UK — Pay employers' PAYE →Work top to bottom the first time. Items 1–3 are one-off setup; items 4–7 repeat for every new starter; items 8–9 become your regular pay-run and payment routine. The date to pin to the wall is the FPS — on or before every payday — with your PAYE payment following by the 22nd of the next tax month.
An overseas employer with a UK tax presence — a branch, agency or representative office — must set up a PAYE scheme even for a single UK employee, and can register with HMRC remotely. The pay-before-your-reference workaround (run payroll, store the FPS, send it late) is designed for exactly this situation.
Register the PAYE scheme before the first payday
The first three items are the scheme itself. You register as an employer with HMRC before the first payday to get your employer PAYE reference, but not more than two months before you start paying people — and you register even if the only person on the payroll is you. Registering online automatically enrols you for PAYE Online; the activation code arrives by post within 10 days and must be activated within 28 days. Alongside that, you need HMRC-recognised software that can file RTI online.
Lead time — an unverified point. GOV.UK states the timing rules (before the first payday; no more than two months early; the reference arrives by letter) but does not publish a fixed number of working days for the employer PAYE reference to arrive. Treat any specific day-count with caution and check GOV.UK's current "when to expect your letter" guidance — and if you must pay someone before it lands, use the store-and-send-late-FPS workaround (item 8).
New-starter data: tax code, NI number and student loan
For each person you take on, three data points feed the very first pay run. The tax code comes from a P45 where there is one; where there isn't, an emergency code (ending W1, M1 or X) applies and is worked out on that period alone, with HMRC issuing the correct code — and any change — through PAYE Online. You capture the employee's National Insurance number for the FPS, and establish whether a student or postgraduate loan is being repaid: if a plan clearly applies but you don't yet know which, use Plan 5 until the SL1 start notice arrives.
Auto-enrolment and the day-one written statement
Two duties attach around the start date itself. Auto-enrolment duties begin on the day your first member of staff starts work, so a qualifying pension scheme needs to be in place before that first payday for anyone aged 22 to State Pension age earning at least £10,000 a year; the minimum is 8% of qualifying earnings, at least 3% from the employer. And under the Employment Rights Act 1996, every worker must get a written statement of employment particulars as a single document given no later than the beginning of employment — a day-one right, separate from the contract.
Be ready to file the first FPS and pay HMRC
Once someone is on the payroll, the core RTI rule is that the FPS reporting pay and deductions reaches HMRC on or before payday. New employers get a narrow concession — no late-filing penalty if the first FPS is sent within 30 days of paying an employee — but the process to build is on-or-before. Payment of what you've deducted then follows by the 22nd of the next tax month electronically (19th by post), with quarterly payment possible for employers who usually owe less than £1,500 a month.
Quick answers
When do I have to register as an employer with HMRC?
Before your first payday — but you cannot register more than 2 months before you start paying people. You must register even if you only employ yourself, for example as the only director of a limited company. HMRC then sends your employer PAYE reference number in a letter. GOV.UK sets these timing rules but does not publish a fixed number of working days for the reference to arrive, so allow lead time and check GOV.UK's current guidance.
Can I run payroll before my PAYE reference arrives?
Yes. HMRC's stated workaround is to run payroll, store your full payment submission, and send a late full payment submission (FPS) once your employer PAYE reference comes through — selecting late-reporting reason code G so HMRC knows why it is after payday.
When must the first FPS reach HMRC?
On or before your employee's payday. As a concession for brand-new employers, HMRC will not charge a late-filing penalty if you are a new employer and you send your first FPS within 30 days of paying an employee — but the rule to build your process around is on or before payday.
When do I pay HMRC what I have deducted?
By the 22nd of the next tax month if you pay electronically, or by the 19th if you pay by post. If you usually pay less than £1,500 a month you may be able to pay quarterly instead of monthly. Separately, deducted workplace-pension contributions must reach your pension scheme by the 22nd (19th if you pay by cheque) of the next month.
Every item on this list, automated
Ledra Pay handles the repeating parts of UK payroll for you — RTI filing on or before every payday, tax-code and student-loan operation, auto-enrolment assessment and pension contributions, and the pay-HMRC schedule — with an auditable evidence trail behind every figure. Set the scheme up once and the new-starter and pay-run steps run themselves.
See Ledra Pay coverage →Government sources
- GOV.UK — Register as an employer (register before the first payday; not more than 2 months early; register even if only employing yourself; store-and-send-late-FPS workaround).
- GOV.UK — PAYE Online for employers (automatic enrolment; activation code within 10 days; activate within 28 days).
- GOV.UK — Find payroll software recognised by HMRC (recognition means you can report PAYE online; not an endorsement).
- GOV.UK — Payroll software (you must get software that reports PAYE information online, unless exempt).
- GOV.UK — Emergency tax codes (W1/M1/X codes and the week 1 / month 1 non-cumulative basis).
- GOV.UK — Tax codes (HMRC tells the employer which code to use; updates within 15 working days).
- GOV.UK — Special rules for student loans (use Plan 5 until you get an SL1 start notice; postgraduate loans run alongside).
- GOV.UK — What payroll information to report to HMRC (the employer PAYE and Accounts Office references and starter details reported on the FPS).
- The Pensions Regulator — New employers (duties start on the day your first member of staff starts work).
- GOV.UK — Workplace pensions: who is enrolled (aged 22 to State Pension age, earning at least £10,000, working in the UK).
- The Pensions Regulator — Making contributions to your pension scheme (total 8% / employer at least 3%; contributions to the scheme by the 22nd/19th).
- GOV.UK — Written statement of employment particulars (principal statement on the first day of employment).
- Employment Rights Act 1996 — section 1 (single document, given not later than the beginning of the employment).
- GOV.UK — Running payroll: reporting to HMRC (FPS) (send the FPS on or before payday).
- GOV.UK — What happens if you do not report payroll information on time (no penalty if a new employer sends the first FPS within 30 days of paying an employee).
- GOV.UK — Sending an FPS after payday (report as soon as possible after you receive your PAYE reference; select late-reporting reason code G).
- GOV.UK — Pay employers' PAYE (pay by the 22nd if electronic, 19th if by post; quarterly if usually less than £1,500 a month).