When do I need to register for PAYE as an employer?

Registering as an employer is the step that unlocks everything else. HMRC issues a PAYE reference (the employer reference number) and an Accounts Office reference; you need both for every submission. Registration is free and done online, but allow up to five working days, and register roughly four weeks before the first payday so nothing is left to chance. You cannot run payroll until it is confirmed.

Running payroll under RTI

Each payday you calculate gross pay, deduct income tax using the employee's tax code and National Insurance using their category letter, and work out your own employer's National Insurance on earnings above the secondary threshold of £5,000 a year. Employer NICs are an additional cost to you, not a deduction from the employee.

Under Real Time Information you must send HMRC a Full Payment Submission on or before each payday — every time you pay someone, not monthly and not at year end. In a period where you pay nobody, send an Employer Payment Summary by the 19th of the following month instead, or HMRC will assume money is owed. An EPS is also how you claim recoverable amounts such as statutory maternity pay or the Employment Allowance.

Paying HMRC, penalties and records

Pay the tax and NICs you have collected by the 19th of the following month, or the 22nd if paying electronically; HMRC's tax month runs from the 6th to the 5th. Employers consistently paying under £1,500 a month can usually switch to quarterly payment.

Late or missing RTI returns attract automatic monthly penalties scaled by headcount: £100 for up to 9 employees, £200 for 10–49, £300 for 50–249 and £400 for 250 or more. HMRC generally allows one unpenalised late filing per tax year as an informal practice, but from the second failure penalties apply automatically. They can be appealed for a reasonable excuse such as a system outage or bereavement.

Even below the tax thresholds you should still report payments through RTI — someone earning between the Lower Earnings Limit of £129 a week and the primary threshold pays no NICs but still builds a qualifying year. Keep payroll records for at least three years from the end of the relevant tax year, issue a P45 promptly when someone leaves, and give every employee still working for you a P60 by 31 May.