How to Register for PAYE as a UK Employer

Yes, you must register for PAYE, and the deadline is before your first payday, not at the end of the tax year or once you have processed a few pay runs. This applies whether you are a limited company director paying yourself a salary, a sole trader taking on a first employee, or a partnership with any salaried workers.

This guide covers what triggers the registration obligation, the step-by-step HMRC online process, what references you receive and when, ongoing RTI obligations, the employer NIC cost from 6 April 2025, and what happens if you register late. Figures are based on the HMRC employer rates and thresholds for 2025/26, verified 2026-06-12.

Who Must Register for PAYE as an Employer?

You must register as a PAYE employer if any of these apply in the current tax year (from 6 April):

• Any employee earns £96 or more a week (the secondary threshold, £5,000 a year, from 6 April 2025)
• Any employee receives expenses or company benefits reportable through payroll
• Any employee is receiving a pension from you
• A new employee has had another job in the same tax year or received jobseeker's allowance or similar

The gov.uk register-employer page is explicit that this requirement applies "even if you're only employing yourself, for example as the only director of a limited company." A one-director company paying a salary of any size must operate PAYE.

There is no de minimis exemption for small payments. If you are paying any employee any amount that meets the above conditions, you register before you pay them, full stop.

Sole traders and partnerships: when does the obligation arise?

As a sole trader, you do not pay yourself through PAYE. Your drawings are not wages; your income is declared through your Self Assessment tax return. But the moment you employ anyone else (a part-time assistant, a delivery driver, a bookkeeper on a fixed wage), you register as a PAYE employer for their pay. Partners in a general partnership are not employees for PAYE purposes, so their profit share does not trigger PAYE, but any salaried partner or employed staff member does.

When to Register: The Deadline You Cannot Miss

Register before your first payday. HMRC's own guidance states you cannot register more than two months before you start paying people, so the window is tight in both directions: not too early, and never late.

For a new limited company director setting a salary from the first month of trading, that means registering before the first salary payment, even if you have not yet worked out the optimal salary level. Set the scheme up first; you can adjust the salary level later.

Business type	What triggers registration	Deadline
Limited company director	First director salary payment (dividends alone do not trigger PAYE)	Before first pay date
Sole trader	First employee's start date	Before first pay date
Partnership	First salaried employee or salaried partner start date	Before first pay date
Any employer	Employee earning £96+ a week, or receiving benefits/pension	Before first pay date

What You Need Before You Start the Registration

The registration is done entirely online. Have the following ready before you start:

• Government Gateway user ID and password. Create one if you do not have one, using your National Insurance number and email address.
• Business UTR. Limited companies use the company's Corporation Tax UTR; sole traders use their personal UTR; partnerships use the partnership UTR.
• Companies House registration number (limited companies only).
• Business name and registered address.
• First employee or director start date (or first pay date for a director salary).
• Expected number of employees in the next 12 months.
• Confirmation of which payroll software you will use (or Basic PAYE Tools if you have nine or fewer employees).

If you are a limited company, you may need your company's Corporation Tax UTR and your company registration number alongside your personal Government Gateway credentials. These are distinct from your personal Self Assessment details.

How to Register for PAYE Online: Step by Step

Step 1: Log into HMRC Online Services

Go to HMRC Online Services and sign in to your Government Gateway account. If you do not have one, select the option to create an account. You will need your National Insurance number and a valid email address. If you already operate a PAYE scheme under a different account, make sure you are using the right login before you proceed.

Step 2: Select "Register as an employer"

Once logged in, navigate to the PAYE section and select "Register as an employer." This option only appears if you do not already have a PAYE scheme linked to that account.

Step 3: Provide your business details

Select your business type and enter the relevant details:

• Limited company: company name, registered address, Companies House number, Corporation Tax UTR.
• Sole trader: full name, trading name (if different), business address, personal UTR.
• Partnership: partnership name, address, partnership UTR.

Step 4: Enter your first employee's start date

Enter the date your first employee starts work, or for a director paying themselves a salary, the date of the first intended pay run. HMRC uses this date to set your reporting schedule. You cannot backdate the start date to before the two-month window.

Step 5: Choose payroll software

HMRC will ask whether you will use commercial payroll software or their free Basic PAYE Tools. Basic PAYE Tools handles FPS submissions, payslips and year-end P60s for up to nine employees at no charge. Cloud-based payroll modules in accounting packages such as Xero, FreeAgent or QuickBooks are the most common choice for limited companies because they integrate with bookkeeping records and automate FPS submissions.

Step 6: Submit and wait for your reference by post

Review all the information and submit. HMRC processes the registration and sends your employer PAYE reference number and Accounts Office reference number by letter. Do not assume the references arrive within a day or two; the letter can take longer, particularly at busy points in the tax year. If you need to run your first payroll before the letter arrives, you can do so and submit a late Full Payment Submission once you have your reference number.

Keep both reference numbers safe. You need them for every payroll submission and every payment.

Your Two HMRC Reference Numbers: What Each Is For

Reference	Format	When you use it
Employer PAYE reference	123/AB45678	All payroll submissions (FPS, EPS), employee P60s and P45s, HMRC correspondence about your employees
Accounts Office reference	13 characters, starts with a number	All payments to HMRC for PAYE and NIC; always quote this when making payroll payments

What Happens After You Register: Ongoing RTI Obligations

Registration is the start. From the moment you have a PAYE scheme, the following obligations apply.

Full Payment Submissions (FPS): on or before every payday

Every time you pay an employee, you submit a Full Payment Submission (FPS) to HMRC on or before the pay date. This is a legal requirement under the Real Time Information (RTI) system, which has applied to all PAYE employers since April 2013. The FPS tells HMRC the gross pay, tax deducted, employee NIC, employer NIC, and year-to-date figures for each employee. "On or before" means exactly that: not the day after, and not the end of the month.

Late FPS submissions trigger automatic penalties, charged quarterly. The penalty per month of delay scales by headcount (§9 of HMRC employer rates, confirmed at source gov.uk RTI penalty guidance):

Number of employees	Monthly penalty per scheme
1 to 9	£100
10 to 49	£200
50 to 249	£300
250 or more	£400

HMRC gives some leniency: a first late FPS in a tax year typically triggers a warning rather than a penalty, and an FPS arriving within three days of payday is generally not penalised. But do not treat these as a routine buffer.

Employer Payment Summaries (EPS)

Submit an EPS in any month where you pay no employees (to tell HMRC you owe nothing), or to claim statutory payment recoveries or the Employment Allowance. The EPS is submitted after the end of the tax month and before the 19th of the following month.

Making payments to HMRC

You pay the income tax and NIC (employee and employer) you have collected to HMRC by the 22nd of the following month (19th if paying by cheque). For small employers whose average monthly PAYE liability is less than £1,500, quarterly payment is available on request.

The employer NIC rate is 15% on earnings above the secondary threshold of £5,000 a year (£96 a week), from 6 April 2025 (§4 of this site's locked positions). This supersedes the old 13.8% rate and £9,100 secondary threshold, which applied only to 5 April 2025. The Employment Allowance is £10,500 for 2025/26 and offsets employer NIC for eligible businesses, but is not available to a company whose only employee is a single director (§4; National Insurance Contributions Act 2014). Most one-director companies therefore set the director's salary at or around the secondary threshold to avoid triggering employer NIC at all.

Payroll records: minimum retention period

HMRC requires you to retain payroll records for at least three years from the end of the tax year they relate to. In practice, six years is safer because the corporation tax and accounting retention window runs longer. Records include employee names, addresses, NI numbers, gross pay, deductions, net pay, P45s, P60s and any P11D benefits-in-kind data.

Year-end obligations

By 19 April after each tax year end, submit final FPS data or an EPS marked as the final submission. By 31 May, issue P60s to every employee who was on the payroll on 5 April. By 6 July, submit P11D returns for any expenses or benefits in kind not processed through payroll.

The Employer NIC Cost in Practice: a Worked Example

Understanding the actual employer cost of a hire is important before you take on staff. Here is how it stacks up for a 2025/26 employee on £30,000 annual salary (§9).

Gross salary: £30,000. Employer NIC applies at 15% on the salary above the secondary threshold of £5,000. The NIC-liable band is £30,000 minus £5,000 = £25,000. At 15%, that gives employer NIC of £3,750.

Employer pension (minimum auto-enrolment contribution at 3% on qualifying earnings above the lower qualifying earnings band of £6,240): qualifying earnings band = £30,000 minus £6,240 = £23,760. Employer contribution at 3% = £713.

Total employer cost for a £30,000 salary: £30,000 (salary) + £3,750 (employer NIC) + £713 (employer pension) = £34,463 before payroll running costs and statutory liability exposure (sick pay, maternity). The salary headline understates the real cost by roughly 15% for this employee, and employer liability insurance is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969 from the moment you have an employee.

For a director with a sole-director company, salary choices turn on two thresholds that do different jobs. Setting salary at the secondary threshold of £5,000 a year means employer NIC = £0 (salary does not reach the threshold), so the company pays exactly £5,000 and no more. However, £5,000 sits below the Lower Earnings Limit of £6,500 a year (£125 a week, 2025/26), so that salary does not bank a state-pension qualifying year for the director. A salary at the LEL (£6,500) does earn the qualifying year, but it costs the company 15% employer NIC on the £1,500 above the secondary threshold (about £225 a year), and that £225 is not covered by the Employment Allowance for a single-director company. Many directors therefore choose one of two positions: £5,000 (zero NIC cost, no qualifying year) or £6,500 or higher (qualifying year secured, small NIC cost). The right choice turns on whether the qualifying year matters to the individual director given their existing state-pension record. Directors whose company has at least one genuine non-director employee can claim the Employment Allowance, making a £12,570 salary the usual optimal level.

Special Situations: Directors, Contractors and IR35

Limited company directors

A director of a limited company is an employee for PAYE purposes, even if they are the only person in the company. You must register a PAYE scheme if you pay any salary. Many owner-directors combine a modest salary with dividends for tax efficiency. The optimal salary level depends on whether the Employment Allowance is available (it is not for a single-director company, §4). Our page on running payroll for one employee as a director walks through the salary decision and the monthly submission process in detail.

Contractors and IR35

If you are a contractor inside IR35 working with a medium or large client, the client (or the fee-payer in the chain) operates PAYE on your fees from 6 April 2021 under the Chapter 10 off-payroll rules (ITEPA 2003). Your personal service company does not register for PAYE in respect of those fees. However, your company still needs its own PAYE scheme for any director salary you pay yourself (§13). If you are outside IR35, your company registers for PAYE in the normal way for your salary, with dividends reported separately on your Self Assessment return.

Partnerships with salaried partners

General partners' profit shares flow through the partnership tax return, not payroll. But if the partnership employs any staff, or has salaried partners whose arrangements fail the tax-transparency test (for example an LLP salaried member caught by the ITTOIA 2005 s.863A conditions, §6), those people are employees for PAYE and the partnership registers as a PAYE employer in the normal way.

Common Mistakes and How to Avoid Them

Assuming the PAYE reference arrives instantly. It does not. HMRC sends the reference by letter. If you need to pay someone this month and the letter has not arrived, run the payroll and submit a late FPS once the reference lands. Do not delay paying your employee on this account.

Registering too late. The most expensive mistake. HMRC backdates the registration and expects late FPS submissions for every missed pay period. Penalties start at £100 per month for even the smallest payroll. Register immediately if you are behind; do not wait until the next tax month.

Using the wrong Government Gateway account. Many directors have personal accounts for Self Assessment. The employer PAYE registration may need to go on your business Government Gateway account, or a new account linked to the company. Check before starting.

Missing the Employment Allowance. If your employer NIC liability is below £10,500 and you have at least one genuinely employed non-director member of staff, claim the Employment Allowance via your payroll software or an EPS. For a business where the only employee is a single director, the allowance is not available (National Insurance Contributions Act 2014).

Treating CIS subcontractors as PAYE employees. If you use the Construction Industry Scheme for subcontractors, those workers are not PAYE employees and are not reported through FPS. CIS and PAYE are separate reporting systems. You may need both schemes if you have a mix of employed workers and subcontractors.

Stale NIC figures in the software. Any software or template using the old 13.8% employer NIC rate and £9,100 secondary threshold needs updating. The current rate is 15% above the £5,000 secondary threshold from 6 April 2025 (§4, verified at source). Running payroll at the wrong rate means you are either overpaying or underpaying HMRC.

Registration for PAYE and Corporation Tax: Two Separate Obligations

A new limited company has two distinct HMRC registration obligations that often arise at the same time. PAYE registration is triggered by the first employee or director salary. Corporation Tax registration must happen within three months of starting to trade (HMRC sends a CT603 notice, or you register online via your business tax account). The two registrations use different UTRs and different online services. Missing either has consequences: an unregistered company can attract HMRC compliance checks and late-filing penalties for the CT600 return.

For more on corporation tax rates and the interaction with salary and dividend extraction, see our guide to PAYE for a director who works for two companies, which covers how the secondary threshold, the Employment Allowance and the NIC-liable earnings bands work across multiple employments.

What to Do If You Have Missed the Registration Deadline

Do not let a late registration compound. Register immediately through the HMRC online employer registration service. Once you have your reference numbers, go back through every pay period you missed and submit late Full Payment Submissions for each one. Your payroll software will generate these; if you have not been keeping payroll records, reconstruct them from bank records and any pay agreements in place. HMRC will issue penalty notices for the late FPS submissions, charged quarterly. You can appeal where there is a reasonable excuse, but the bar is high. Prompt action and transparent catch-up is the fastest route to resolution.

For a broader look at how payroll fits into the running of a new business, see our guide on how to set up PAYE for a new business, which covers the post-registration steps including first-run payroll, P46 and starter declarations, and the auto-enrolment trigger assessment. If you are managing a multi-employee payroll and want to understand whether specialist support makes sense, our page on whether you need an accountant for payroll sets out where professional help adds value versus running it yourself.