Running payroll as an employer

Everything a UK employer has to do, from registering a PAYE scheme to the forms and deadlines that keep HMRC happy – and what it costs to get help.

Setting up

Register as an employer with HMRC before the first payday (allow up to 15 working days for your PAYE reference). You will need payroll software that submits RTI – HMRC’s free Basic PAYE Tools works for very small employers, while most use commercial software or outsource to a bureau or accountant. You must also set up a workplace pension scheme and assess every worker for auto-enrolment from day one.

The payroll cycle

• Each payday: calculate pay and deductions, give every employee a payslip, and file the Full Payment Submission (FPS) on or before the day they are paid. Late FPS filings attract automatic penalties from £100 a month.
• Monthly: pay HMRC the tax and NI you have deducted by the 22nd (electronic) or 19th (post). Employers expecting to owe under £3,000 a year can pay quarterly. File an EPS if you are reclaiming statutory pay or claiming the £10,500 Employment Allowance.
• Year end: final FPS by 5 April, P60s to all employees by 31 May, and P11Ds for benefits in kind by 6 July (Class 1A NI by 22 July).

Starters and leavers

New starters without a P45 complete a starter checklist that sets their initial tax code – get this wrong and they end up on an emergency code. Leavers must receive a P45 showing pay and tax to date. Both flow through the FPS automatically in decent software.

What April 2026 changed

This year’s compliance load is heavier than usual: day-one SSP with no lower earnings limit, the new Plan 5 student loan deductions, and minimum wage rises of up to 8.5 percent – while the incoming Fair Work Agency consolidates enforcement of wage and sick pay rules. It is also why many smaller employers choose to outsource payroll entirely. Budget for higher employment costs with the cost of an employee calculator.