Quick Overview

PAYE (Pay As You Earn) is how employers collect Income Tax and National Insurance from employees' pay on behalf of HMRC. Most companies that pay themselves or staff a salary need to register as an employer for PAYE.

Who This Guide Is For

This guide is for companies about to pay their first salary, whether to an employee or to a director.

What You May Need

  • Your company's registration details
  • The date you plan to start paying staff
  • Payroll software or a payroll provider

Step-by-Step Process

  1. Confirm you need to register. This generally applies once you pay any employee (including a director) above the relevant threshold, or provide certain benefits.
  2. Register as an employer with HMRC, ideally before the first payday.
  3. Set up payroll software that can report pay and deductions to HMRC in real time.
  4. Run payroll each pay period, calculating tax and National Insurance correctly.
  5. Report to HMRC on or before each payday, under Real Time Information (RTI).

Important Considerations

Registration can take time to process, so it's worth starting well before your first payday. Even a company with a single director-employee generally needs to register and run PAYE correctly.

This guide provides general information only and is not personalised tax advice.