A lot of new directors assume PAYE is only relevant once they hire staff. In practice, it usually applies from the moment you start paying yourself a salary from the company.

What PAYE Actually Does

PAYE is the system employers use to collect Income Tax and National Insurance from pay, and send it to HMRC — rather than employees sorting it out themselves at year-end.

Registration Comes First

Before you can run payroll, you need to register as an employer with HMRC. It's worth doing this ahead of your first planned payday, since processing takes time.

Reporting Happens Every Payday

Under Real Time Information, pay and deductions are reported to HMRC on or before each payday — not bundled up at the end of the year.

This article provides general information only and is not personalised tax advice. For the full guide, see our Business Guide to PAYE Registration.