How to register as an employer for PAYE in the UK

As soon as you start paying people — hiring staff or paying yourself a salary as a company director — you become an employer in HMRC's eyes and must operate the PAYE system. To do that you first register as an employer and get an employer PAYE reference.

When do you register?

You must register before the first payday — that is when you receive your employer PAYE reference. You cannot apply more than two months before you start paying people: registration opens in a window of up to two months before the first salary. Do not leave it to the last day: the reference comes by letter, which takes time.

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Who must register?

Registration is needed when you start employing staff or use subcontractors in construction. It is also required when your only 'employee' is yourself: for example, if you are the sole director of a limited company paying yourself a salary. Most companies with one to nine directors can register online; other business types have a separate route.

What if payday arrives before the reference does?

This can happen if registration takes a while. There is a way through: run the payment through payroll, keep a full copy of the full payment submission, and as soon as the reference arrives, send HMRC a late full payment submission. That keeps you compliant and avoids delaying your employee's pay.

What happens after registering?

With a PAYE reference you run payroll: at each payment you deduct income tax and national insurance and report to HMRC in real time. You must give staff payslips, keep records and pay what you have deducted on time. For a small business it is usually easiest to use suitable payroll software or an accountant so you do not miss deadlines and filings.

Do you always have to operate PAYE?

Not in every case. If you pay an employee very little — below the set threshold (the Lower Earnings Limit) — and they have no other job and do not receive a pension, you may not formally need to register and run PAYE. But even then the law requires you to keep a record of payments. As soon as pay reaches the threshold or the worker takes a second job, PAYE duties arise. The current thresholds and exact conditions are best checked on GOV.UK, as they are reviewed year to year. If you are unsure whether you need to register, it is safer to check in advance: HMRC charges penalties for late PAYE reporting and late payments, and fixing things after the fact is always harder than doing them on time.