How to Set Up Payroll for a New UK Business in 2025

Starting a new business in the UK? If you plan to pay yourself or hire staff, you need to set up payroll—and register with HMRC.

Here’s a simple step-by-step guide to get it done correctly in 2025.

Step 1: Check If You Need Payroll

You need to run payroll if:

• You pay yourself through PAYE

• You hire employees (even part-time or casual)

• You provide staff benefits (cars, bonuses, housing, etc.)

If you’re a sole trader with no staff, you don’t need payroll.

Step 2: Register as an Employer With HMRC

Register for PAYE at gov.uk before your first payday.

You'll get:

• PAYE reference number

• Accounts Office reference

• Access to HMRC’s online payroll system

Timing: Allow at least 5 working days.

Note: Even if you only pay yourself as a director, you still need PAYE.

Step 3: Choose How You'll Run Payroll

Option 1: Use Payroll Software

• You handle calculations, payslips, and RTI

• Higher risk of errors or missed deadlines

• Time-consuming for small teams

Option 2: Use a Payroll Service (Recommended)

• You outsource it all

• They register you, run payroll, file RTI, and manage pensions

• Saves time and avoids compliance risk

WorldWage Services handles everything from setup to pay runs—ideal for new businesses.

Step 4: Gather Employee Information

For each employee (including directors), you’ll need:

• Full name and address

• National Insurance number

• Date of birth

• Tax code or P45

• Bank details

• Employment start date

Step 5: Run Your First Payroll

Each pay period (weekly or monthly), you must:

• Calculate gross pay

• Deduct tax and NI

• File an FPS (Full Payment Submission) to HMRC

• Pay staff and HMRC on time

Important: File the FPS on or before payday to avoid penalties.

Step 6: Set Up a Workplace Pension

Auto-enrolment is a legal requirement if your staff:

• Are 22 or older

• Earn over £192/week

• Work under a contract

You must:

• Choose a pension provider

• Enrol eligible staff

• Submit contributions monthly

WorldWage includes pension setup and submission in our payroll packages.

Step 7: Stay Compliant Each Year

• Submit all pay runs via RTI

• Issue P60s by 31 May each year

• Keep payroll records for 3+ years

• Reassess pensions every 3 years

• Respond to HMRC notices promptly

Starting a Business? Let Us Handle Your Payroll

WorldWage Services helps new UK businesses:

• Register for PAYE

• Set up first payroll

• Avoid HMRC fines

• Get running quickly and legally

Get a quote for startup payroll