Register as an employer

Before your first payday you need to register with HMRC as an employer. HMRC gives you a PAYE reference and an Accounts Office reference, which you use for every submission and payment. You also need employers’ liability insurance from the day you take someone on.

Each payday: PAYE and Real Time Information

Under Real Time Information (RTI), you report each employee’s pay and deductions to HMRC on or before every payday using a Full Payment Submission (FPS). You use an Employer Payment Summary (EPS) to claim reductions you are entitled to, such as statutory payments you can recover, or to tell HMRC you paid no one in a period.

For each employee, payroll works out income tax from their tax code, employee and employer National Insurance, student loan or postgraduate loan repayments where they apply, and pension contributions. You then pay HMRC what you owe, usually by the 22nd of the following tax month when paying electronically.

Payslips

Every employee is entitled to a payslip on or before payday, showing gross pay, deductions and net pay. Where pay varies with time worked, the payslip must show the hours being paid for.

Workplace pensions and auto-enrolment

Every employer must automatically enrol eligible staff into a workplace pension. Broadly, that means workers aged between 22 and State Pension age who earn above the earnings trigger, currently £10,000 a year. Minimum contributions are 8% of qualifying earnings in total, of which the employer must pay at least 3%. Others can ask to join, and you must re-enrol staff who opted out roughly every three years.

Statutory sick, family and holiday pay

  • Statutory Sick Pay (SSP) is paid to eligible employees who are off sick. Check current eligibility and rates, which change with legislation.
  • Statutory maternity, paternity, adoption and shared parental pay follow their own qualifying rules; employers can usually recover most of what they pay through the EPS.
  • Holiday pay: most workers are entitled to 5.6 weeks’ paid holiday a year, with rules for irregular-hours and part-year workers.

Starters and leavers

For a new starter, use their P45 from a previous employer, or the starter checklist, to set their tax code. When someone leaves, give them a P45 and report the leaving date on your next FPS.

At the end of the tax year

  • Send your final FPS for the year, and an EPS if you need to.
  • Give each employee on your payroll at 5 April a P60 by 31 May.
  • Report taxable benefits and expenses that are not payrolled on P11D forms by 6 July.
  • Apply the new tax year’s codes and thresholds from 6 April.

Keep good records

You must keep payroll records, including pay, deductions, reports and payments to HMRC, for at least three years after the end of the tax year they relate to. Good software keeps these for you, together with the history of each change.

Where software helps

Payroll software calculates deductions, produces payslips and sends RTI submissions. The biggest time savings come when your HR records and payroll are connected, so starters, leavers, salary changes, sickness and leave reach payroll without re-keying. RinHR, our product, keeps those records and prepares UK pay runs for review; its payroll is in early access and does not yet submit to HMRC. See pricing for details.