Registering for PAYE When You Hire Your First UK Employee: Employer Registration, Right-to-Work Checks and First Payroll Deadlines

When must you register as an employer in the UK? Your first hire brings important deadlines and potential penalties:

• Register for PAYE before the first payday, if required
• Check right to work before day one
• Assess pension duties from the employee's first working day
• Employing an illegal worker without proper checks can bring a civil penalty of up to £45,000 for a first breach.

In this guide, we explain how to register as an employer in the UK. We cover HMRC's PAYE process, right-to-work checks, auto-enrolment and first payroll deadlines.

What Does PAYE Registration Mean for New UK Employers?

PAYE registration records a UK company as an employer with HMRC. It provides the references needed to report pay and deductions each payday.

Pay As You Earn (PAYE) is HM Revenue & Customs' (HMRC) system for collecting Income Tax and National Insurance contributions (NICs) from anyone a UK business employs. A single full-time, part-time, casual or family worker can trigger PAYE registration if the conditions apply. An exception may apply if everyone is paid below HMRC's threshold and has not had another job in the current tax year or received a pension, relevant expenses or benefits. For 2026-27, registration is required if an employee is paid £96 or more a week or has received Jobseeker's Allowance, Employment and Support Allowance or Incapacity Benefit in the current tax year. Employers who do not need to register must still keep payroll records.

PAYE treatment follows employment status rather than registration, so a genuinely self-employed contractor stays outside PAYE, though off-payroll working rules can complicate the picture. Getting employment status right before the contract is signed prevents costly HMRC corrections later.

Regardless of when you set up your business in the UK, check your employer duties before hiring.

How Do You Register as an Employer With HMRC?

Registration is an online process built around your company details — done early, it delivers the PAYE reference and Accounts Office reference for your FPS, although you can still run payroll before those references arrive if needed.

According to HMRC, employers who need PAYE must register before the first payday. Apply early to allow time for your PAYE reference to arrive. If it has not arrived by payday, you can still pay your employee and then submit the FPS as soon as possible after receiving the reference. We expand the wider hiring journey in our guide to first time hires in UK and registering for PAYE.

The registration workflow itself breaks down into four steps, each of which we set out below.

1. Confirm your worker's employment status

Check whether your hire is an employee or genuinely self-employed before signing. Employment status decides whether PAYE applies at all, so review HMRC's status indicators first.

2. Gather your company and payroll details

You will need your Companies House registration number, your company Unique Taxpayer Reference, the registered office address, payroll contact details and your intended first payday date.

3. Register online before the first payday

HMRC's Register as an employer service on GOV.UK handles the application through a Government Gateway account. If registration is required, apply early after the job offer is accepted, but no more than two months before you start paying staff.

4. Receive your PAYE and Accounts Office references

HMRC issues an employer PAYE reference for payroll filings and a 13-character Accounts Office Reference Number for payments. Keep both safely — every submission and payment you make as an employer relies on them.

What Right-to-Work Checks Must UK Employers Complete Before Day One?

Check every new employee's right to work before they start, including British citizens. A correctly documented check can establish a statutory excuse against civil penalties for illegal working.

Right-to-work checking sits with the Home Office rather than HMRC, but it lands at the same moment as employer registration: before employment begins. Since 13 February 2024, civil penalties can reach £45,000 per illegal worker for a first breach. For repeat breaches, the maximum is £60,000 per illegal worker. A missed check alone does not automatically trigger a penalty. Knowingly employing someone without permission to work in the UK is a criminal offence.

The Home Office's Check a job applicant's right to work guide sets out acceptable evidence and the exact process employers must follow. In practice, the workflow splits into four steps:

1. Complete the check before employment begins

The check must happen before the employee's first working day. Conducting it afterwards leaves no statutory excuse, however thorough the paperwork.

2. Verify digital statuses with a share code

Applicants with an eVisa or settled status prove eligibility through the Home Office's online service using a share code. Record the result, and diarise a recheck where permission is time-limited.

3. Follow the prescribed manual process

For a manual check, inspect original documents in the applicant's presence. Confirm validity and retain clear, dated copies. For eligible applicants, a registered right-to-work digital verification service provider can conduct digital identity checks.

4. Keep records for the statutory period

Retain the evidence for as long as the person works for you, plus two years after employment ends. Where permission expires earlier, schedule a follow-up check before that date.

When Do Auto-Enrolment Duties Begin for Your First Employee?

Workplace pension duties apply from an employee's first working day. New UK employers must assess staff and enrol eligible workers into a qualifying scheme, although they may postpone assessment and enrolment for up to three months. They must also declare compliance with The Pensions Regulator.

Automatic enrolment is overseen by The Pensions Regulator, and its rules bind every UK employer from the day their first staff member starts work. An employee aged 22 up to State Pension age who earns more than the applicable trigger of £10,000 a year for 2026-27 is an eligible jobholder and must be enrolled. The duties are identical across sectors, whether you are starting a tutoring business in the United Kingdom or hiring into an established consultancy.

Minimum contributions total 8% of qualifying earnings — a band of £6,240 to £50,270 for 2026-27 — with at least 3% from the employer. The sequence for a first hire runs as follows:

1. Assess your employee

Use age and earnings to classify each starter as an eligible jobholder, a non-eligible jobholder or an entitled worker. Assessment normally starts on the first day duties apply, but it can be postponed for up to three months.

2. Choose a qualifying pension scheme

Select a scheme that meets automatic enrolment standards and set up assessment. Many new employers use a low-cost master trust for their first hires.

3. Postpone enrolment if you need time

You may postpone auto-enrolment for up to 3 months, provided you issue the statutory notice, assess the worker when postponement ends and enrol them if they are eligible.

4. Declare compliance within 5 months

Complete your declaration of compliance with The Pensions Regulator within 5 months of the date duties first applied. Workers who give a valid opt-out notice during the one-month opt-out period must have their contributions refunded.

What Deadlines Apply to Your First Payroll Run?

Normally, the first FPS must reach HMRC on or before payday. Monthly electronic PAYE payments are due by the 22nd after the end of the tax month, while approved quarterly payers have quarterly deadlines.

Real Time Information (RTI) reporting makes every payday a filing event. HMRC receives pay, tax and NICs details each time staff are paid, so your first payroll run doubles as your first reporting deadline. The obligations run in a fixed sequence:

1. Collect starter information. Obtain the employee's P45 from their previous employer, or have them complete HMRC's starter checklist covering tax code and student loans.
2. Set up RTI-recognised payroll software. Choose software recognised by HMRC, or appoint a payroll provider to run it for you.
3. Calculate pay, tax and NICs. Apply the correct tax code, and remember employers pay Class 1 NICs at 15% on earnings above the £5,000 annual threshold (frozen until April 2028).
4. File the first Full Payment Submission (FPS). Normally it must reach HMRC on or before payday itself, with the employee's details and the amounts paid. If your PAYE reference has not arrived by payday, you can pay your employee and submit the FPS as soon as possible after receiving the reference.
5. Pay HMRC by the deadline. Electronic payments are due by the 22nd of the month following the tax month (tax months run from the 6th to the 5th); postal payments by the 19th.

Employers whose average monthly PAYE and NICs liability sits below £1,500 can ask HMRC to pay quarterly instead. HMRC may charge a penalty if you file an FPS late. Interest accrues on late payments.

What Employer Costs Should You Budget For?

Three costs catch out most first-time UK employers: employer National Insurance at 15% above a £5,000 threshold, a 3% minimum pension contribution, and employers' liability insurance where required by law.

Employer Class 1 NICs stand at 15% of earnings above the secondary threshold of £5,000 a year, a rate and threshold in force since April 2025 and frozen until April 2028. The Employment Allowance softens the blow. Since April 2025 it has allowed eligible employers to offset up to £10,500 a year against their NICs bill. The former £100,000 eligibility cap no longer applies. A company with one director cannot claim if that director is its only employee liable for employer Class 1 NICs. Only one connected company in a group can claim.

Employers' liability insurance is generally compulsory under the Employers' Liability (Compulsory Insurance) Act 1969, with cover of at least £5 million required from an authorised insurer. Exceptions include certain unincorporated businesses employing only close family members and a company employing only its owner, who owns at least 50% of its issued share capital. Premiums and pension charges vary by provider, so budget both before confirming a salary.

The same cost framework applies when you are starting a mobile beautician business in the United Kingdom. It also applies when hiring into a professional services firm. Assess NICs, pension and insurance obligations when planning your first hire.

Conclusion

Hiring your first employee brings several key milestones:

• Check right to work before the first working day
• Assess pension duties from day one
• Register for PAYE before the first payday, if required
• Normally file an FPS on or before payday when operating PAYE
• Pay PAYE electronically by the 22nd of the following month, unless paying quarterly.

At 3E Accounting United Kingdom, we help startups, SMEs and multinational companies navigate these first-hire milestones. Our corporate services teams handle employer registration, payroll set-up, auto-enrolment and ongoing compliance, supported by technology-enabled processes and the 3E Accounting International Network spanning more than 110 countries.

If you are preparing your first UK employment offer, speak with us about getting employer registration, right-to-work compliance and first payroll right from the start.

Frequently Asked Questions