Taking on your first employee is a good problem to have, but payroll brings a set of legal obligations that start from the moment someone's first payday is agreed, not from when it feels convenient to set up.
At a glance
- Register as an employer with HMRC before the first payday, even for one part-time hire.
- Real Time Information means pay and deductions are reported on or before each payday, not afterwards.
- Workplace pension duties (auto-enrolment) apply from day one for eligible staff.
- P11Ds for benefits-in-kind are due by 6 July, with Class 1A NIC due by 22 July.
Register as an employer
Before the first payday, you need to register with HMRC as an employer, which gives you a PAYE reference. This needs to happen even if you're only paying yourself as a director, or taking on a single part-time member of staff.
Real Time Information (RTI)
Payroll in the UK runs on Real Time Information, meaning HMRC needs to be told about pay and deductions on or before each payday, not after the fact at year end. Each submission (a Full Payment Submission) reports gross pay, tax, National Insurance and any other deductions for that pay period.
Getting the pay date wrong is the most common early mistake. The date reported to HMRC should be the date employees actually receive their pay, not the date payroll is processed; get this wrong consistently and it can create discrepancies that are annoying to unpick later.
Workplace pensions (auto-enrolment)
Employers have a legal duty to assess staff and, where they're eligible, automatically enrol them into a workplace pension scheme, contributing alongside the employee. This applies from an employee's first day in most cases, and the assessment needs to happen for every employee, every pay period, not just once at the start.
Year-end paperwork
At the end of each tax year, employees need a P60 showing their total pay and deductions for the year. If anyone leaves during the year, they need a P45. And if you provide any benefits in kind (a company car, private medical insurance, and similar), these are typically reported on a P11D, due by 6 July after the end of the tax year, with any Class 1A National Insurance due by 22 July if paying electronically.
This article is general information, not advice on your specific circumstances, and deadlines and thresholds can change. Get in touch before your first payday if you'd like help getting PAYE, RTI and pension duties set up correctly from day one.