How to Do Your First Payroll and Register for PAYE in the UK

Everything new business owners need to know – step by step

If you’ve just launched a business and are preparing to take on employees (even if it's just yourself as a director), one of the most important things to get right is payroll. In the UK, this means registering for PAYE (Pay As You Earn) with HMRC, setting up a payroll system, and processing employee pay correctly and on time.

In this guide, we’ll walk you through how to do your first payroll — from setting up with HMRC to paying your team and reporting to HMRC each month.

✅ 1. Understand What PAYE Is

PAYE is HMRC’s system for collecting Income Tax and National Insurance from employee wages. As an employer, you’re legally responsible for:

• Registering for PAYE if employees earn over £123/week

• Deducting tax and NI from their wages

• Paying employer National Insurance contributions (if applicable)

• Reporting everything to HMRC through Real Time Information (RTI)

Even if you're only employing yourself as a director, this still applies in most cases.

📝 2. Register as an Employer with HMRC

You must register with HMRC before your first payday. You can do this online:

🔗 Register as an employer with HMRC

Important notes:

• You need your business details, such as company registration number and address

• Registration can take up to 5 working days (you’ll receive your PAYE reference and Accounts Office reference by post or online)

🕒 Don’t wait until the last minute register as early as possible.

⚙️ 3. Choose How You’ll Run Payroll

You have two main options:

A. Run payroll in-house using payroll software

If you’re confident and want full control, use HMRC-recognised software such as:

• BrightPay

• Moneysoft

• Sage Payroll

• QuickBooks Payroll

• Free HMRC Basic PAYE Tools (for very small employers)

But remember, you'll need to manage tax codes, NI calculations, payslips, RTI submissions, and pension auto-enrolment manually.

B. Outsource payroll to a provider like WorldWage

If you want to save time, avoid compliance errors, and focus on running your business, outsourcing is a smart choice.

At WorldWage, we register you for PAYE, run your payroll each month, and submit everything to HMRC all for one fixed monthly fee.

👥 4. Gather Employee Information

Before you can pay anyone, you'll need:

• Full name and address

• Date of birth

• National Insurance number

• Start date

• Employment contract (hours, salary/wage)

• Tax code (usually from a P45 or use a starter checklist)

• Bank account details for payments

For directors, similar info is required, and you’ll set your own salary/dividend structure (often with accounting advice).

💷 5. Run Your First Payroll

Here’s what the first payroll cycle looks like:

1. Calculate gross payHours worked × hourly rate, or salary divided monthly

2. Calculate deductions

   • Income Tax (based on tax code and thresholds)

   • Employee NI contributions

   • Pension contributions (if applicable)

3. Add employer costs

   • Employer NI

   • Employer pension contribution

4. Create a payslipThis must show gross pay, deductions, net pay, and employer contributions.

5. Report to HMRC via RTISend a Full Payment Submission (FPS) on or before payday using your payroll software.

6. Pay employeesTransfer net pay to each employee’s bank account.

7. Pay HMRCYou must pay your PAYE bill (tax + NI) to HMRC by the 22nd of the following month (or 19th if paying by post).

   
   

🏦 6. Enrol Employees into a Workplace Pension (if required)

If your employee is:

• Aged between 22 and State Pension age

• Earning over £10,000 per year

You must automatically enrol them into a workplace pension and make contributions.

Popular providers include Nest, Smart Pension, and The People’s Pension. Your payroll software or provider should handle this as part of the monthly run.

🧾 7. Keep Records

By law, you must keep records for 3 years, including:

• What you pay each employee

• Deductions made

• Reports sent to HMRC

• Employee leave and sickness

• Payroll software used

• Any pension contributions

⚠️ What If You Make a Mistake?

Mistakes in PAYE can lead to HMRC penalties. If you underpay or report incorrectly, you'll need to file an EPS or correction and possibly pay interest.

This is one reason many small businesses choose to outsource payroll it removes the pressure and risk.

💡 Need Help with Your First Payroll?

At WorldWage, we take the stress out of payroll:

• We register your company for PAYE

• We run your payroll accurately each month

• We file all reports to HMRC on your behalf

• We provide payslips and summaries

• All for a simple fixed monthly fee

Whether you’re a sole director or managing a small team, we’ll help you set everything up correctly from day one.

👉 Get started today or contact us for a quick quote.