How can I start paying employees legally with PAYE in 2026?

Yes. Registering for PAYE lets you legally pay employees by reporting and paying Income Tax and National Insurance to HMRC; you must register before the first payday and operate Real Time Information (RTI) payroll.

What is the legal requirement to start paying employees under PAYE?

You must register your company as an employer with HMRC before the first payday, operate Real Time Information (RTI) payroll, and report Income Tax and National Insurance for each pay run.
UK law requires employers to register for PAYE and submit employee pay data via RTI on or before each payment. Registration normally occurs within 4 weeks of hiring if payments will be made, but employers register before the first payday to avoid penalties. Employers also obtain payroll reference numbers and set up PAYE accounts to pay PAYE liabilities monthly or quarterly, depending on size.

How does registering for PAYE work?

Registering involves creating an online PAYE account, providing company and director information, and waiting for an employer PAYE reference and accounts office reference.
You register at HMRC using the company’s Government Gateway credentials or new HMRC sign-in. Required details include company registration number, directors’ names, addresses, and PAYE contact. HMRC issues an employer PAYE reference and Accounts Office reference by post within 5–10 working days. After registration, set up payroll software that supports RTI and use it to report each pay run and to calculate tax and National Insurance contributions.

When must a company register for PAYE?

Register before the first payday; if you pay salaries, bonuses, or expenses above thresholds, register at least four weeks before payments start.
HMRC’s practical rule asks employers to register before making payments that require tax or National Insurance deductions. Examples of taxable payments include salary, commissions, bonuses, and certain benefits in kind. For casual or irregular staff, register when planning the first payment. Late registration triggers potential penalties and interest on unpaid deductions.

What payroll thresholds affect PAYE responsibilities?

PAYE applies once you pay employees above National Insurance and Income Tax thresholds; use exact figures, such as the 2026/27 personal allowance and primary threshold, for precise payroll calculations.
For example, the 2026/27 personal allowance is £12,570, which affects Income Tax deductions, and the employee's primary Class 1 National Insurance threshold is £12,570 per year. Employers must also assess the secondary threshold for employer NI, which is £9,100 per year for small employers (example figure—check current HMRC rates during setup). Include student loan and statutory pay obligations when calculating deductions. For more information, also read our articles, PAYE threshold UK 6 numbers every small business should know, and Online PAYE registration UK process explained in 5 steps.

How do you set up RTI-compliant payroll processes?

Install RTI-capable payroll software, register for PAYE online, collect employee starter details (P45 or starter checklist), and submit Full Payment Submission (FPS) each pay run.
Payroll software authenticates with HMRC and produces FPS files showing gross pay, tax, NI, and statutory payments. Employers submit an Employer Payment Summary (EPS) if no payments are due but statutory payments or apprenticeship levy adjustments apply. Keep contemporaneous records for 3 years after the end of the tax year to support HMRC checks.

What documents do employers need to run PAYE?

Collect P45S or complete a Starter Checklist, obtain National Insurance numbers, proof of right to work, and bank details; retain records for payroll calculations and HMRC audits.
A P45 provides previous pay and tax details. If absent, use the new employee starter checklist to determine tax codes. Validate National Insurance numbers using payroll software and keep copies of contracts and payslips. Issue payslips on or before payday and retain PAYE records, including FPS submissions and payment receipts for at least 3 years.

How do you calculate and pay PAYE liabilities?

Calculate tax and NI via payroll software each pay run, report via FPS, and pay HMRC monthly by electronic transfer using your Accounts Office reference.
Software applies tax codes and NI bands to gross pay, deducting employee tax and employee NI, and calculating employer NI. Employers submit FPS on or before the pay date and make payments to HMRC by the 22nd of the following month if paying electronically (or 19th by post). Late payments incur interest and penalties. Small employers may opt to pay quarterly for PAYE Settlement Agreements, but must still report monthly.

What statutory payments must be managed within PAYE?

Manage statutory sick pay, statutory maternity pay, statutory paternity pay, and statutory adoption pay through payroll and reflect them in FPS submissions.
Statutory payments follow fixed weekly rates: statutory maternity pay is based on a weekly rate (for 2026/27 standard, the rate is set by HMRC; confirm current value at payroll setup). Employers can reclaim certain statutory payments from HMRC via EPS where eligible. Ensure payroll software marks these payments correctly to secure reclaim and avoid liability errors.

Explore our Registering for PAYE guides,

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How does PAYE registration affect other compliance areas?

PAYE registration links to employer National Insurance obligations, workplace pensions auto-enrolment, and payroll tax reporting, requiring coordination across HR and finance.
After hiring, assess pension automatic enrolment duties and enrol qualifying staff into a workplace pension within 3 months of the staging date. Employer contributions and pension deductions must run parallel with PAYE deductions. Maintain cohesive records to support audits and ensure accurate wage, tax, and pension processing.

How can a business minimise PAYE setup risk and errors?

Use accredited payroll software, assign a qualified payroll administrator, reconcile monthly to HMRC payment statements, and document payroll policies.
Payroll audits show reconciliation reduces errors: match payroll reports to bank payments and HMRC PAYE payment summaries. Train staff on RTI submission rules and maintain a change log for payroll settings, such as tax code updates and NI thresholds. Regularly review software updates and HMRC guidance to stay aligned with legislative changes. 

Registering for PAYE and running compliant payroll requires precise setup, RTI-capable systems, and accurate record-keeping. My Company Registration provides step-by-step PAYE registration and payroll setup services for companies that want to start paying employees legally. The service guides you through HMRC employer registration, RTI configuration, and payroll reconciliation to reduce risk and meet reporting deadlines.

Frequently Asked Questions

How long does it take to register my company for PAYE?

Registration typically takes 5–10 working days for HMRC to issue an employer PAYE reference after you submit the company and director details. My Company Registration can prepare and submit the PAYE application to meet HMRC timelines and reduce processing delays.

When must a business register for PAYE before paying employees?

You must register for PAYE before the first payday if you plan to pay salary, bonuses, or taxable benefits. Registering your company for PAYE ensures you report pay data through RTI on or before each pay run to remain compliant.

What information does HMRC require to register a company for PAYE?

HMRC requires the company registration number, director names and addresses, company trading address, and a PAYE contact, plus the expected payroll start date. My Company Registration collects and verifies these details to complete the Register Your Company for PAYE application correctly.

Can small businesses delay PAYE registration if earnings are below thresholds?

No. Employers must register if they make payments that attract Income Tax or National Insurance, regardless of an individual employee’s personal allowance. Registering your company for PAYE helps assess payments and register promptly to avoid penalties.

How do I run payroll after registering for PAYE?

After registration, use RTI-capable payroll software to submit Full Payment Submissions (FPS) on or before each pay date and to calculate tax and National Insurance. My Company Registration can advise on payroll software setup and RTI reporting to streamline compliance.