Employing staff for the first time—whether they’re full-time, part-time, or even just paying yourself a salary through your own limited company? Register for PAYE as employee with HMRC is one of your most significant tasks. Here’s how to do it correctly from the very start.
What is PAYE, and who needs to register?
PAYE is how HMRC collects income tax and national insurance from employees’ earnings. Suppose you’re paying anyone (including yourself as a director) over £123 a week, paying employee benefits, or operating a pension scheme. In that case, you must register as an employer and run payroll.
When do you need to register?
Be careful about the dates you file and register. You need to sign up before your first payday, but not more than two months in advance. There is a limit: sign up too soon, and the system will not process your application. Sign up too late, and you could miss deadlines, which can lead to penalties.
How do you sign up for PAYE?
You can register online at the HMRC website. It may take up to 5 working days to receive your employer’s PAYE and Accounts Office references. You require these to run payroll and report Real Time Information (RTI) to HMRC every time you pay employees.
What are your responsibilities after registration?
Once you’re set-up, you’re responsible for:
§ Operating payroll correctly and on time
§ Calculating tax and National Insurance deductions
§ Giving employees payslips
§ Submitting Full Payment Submissions (FPS) to HMRC on or before the payday
§ Keeping records accurately for at least 3 years
§ Paying HMRC the funds due by the 22nd of the month (or the 19th if you’re paying by post)
Failure to meet a submission or payment deadline can incur penalties or interest, so it’s worth staying on top of this.
Do you need payroll software?
Yes. You’ll need HMRC-recognised payroll software to calculate deductions and send RTI submissions. Many options exist—from free software for small employers to more comprehensive systems for larger teams.
Conclusion
PAYE registration is not difficult, but ensuring you get the timing and compliance right is important. So, whether you are a landlord paying yourself through an SPV or a small business owner employing your first worker, taking PAYE seriously now will save you costly mistakes doing the correct calculations with the help of a VAT calculator.
