PAYE Registration: prepare for your first payday

Check the employment arrangement before setting up PAYE

PAYE obligations depend on the facts of the working arrangement and the payments made. GOV.UK’s first-employer journey distinguishes employees from agency staff, freelancers, consultants and contractors because the responsibilities can differ. Do not use a job title, an invoice or a verbal agreement as the only answer to status questions; use current official guidance and obtain appropriate specialist advice where the position is unclear.

GOV.UK says employers normally need to register for PAYE if an employee meets specified current-year conditions, including certain weekly pay, benefits, pensions, other employment or particular state benefits. Even if registration is not required in a case, payroll records may still be necessary. Check the current GOV.UK rules rather than applying a threshold from this guide to a particular worker.

Register in the correct window

GOV.UK says to register as an employer before the first payday so HMRC can issue an employer PAYE reference. It also says registration cannot normally be made more than two months before you start paying people. A limited company must register even if it is only employing its director. Build enough time into the hiring plan to receive and securely store the employer details and complete setup checks before the pay run.

If a payment must be made before the PAYE reference arrives, GOV.UK has a specific late Full Payment Submission process. Treat that as an exception to manage through the current official instructions, not a reason to postpone registration or ignore payroll reporting. Keep a dated record of the first payday and actions taken.

Set up the first pay run as a controlled checklist

The GOV.UK setup sequence covers: employer registration and PAYE Online access, a method for running payroll, employee records, notifying HMRC about employees, recording pay and deductions, reporting to HMRC on or before payday, and paying HMRC what is owed. These are separate tasks with different evidence, dates and owners; do not assume an employment contract alone completes payroll setup.

Before the first pay run, obtain the employee’s details and P45 where available. GOV.UK says to use HMRC’s starter checklist when there is no P45, then use the information to set the employee up in payroll software. The new employee is reported through the Full Payment Submission on or before the first payday. Keep the documents and reports securely in line with current record-keeping requirements.

Put payroll dates into the cash forecast

A first hire changes cash timing as well as headcount. Put gross pay, employer costs, pension obligations where applicable, payroll-provider costs and the HMRC payment date into the rolling forecast before offering a start date. The First Hire Guide covers wider role cost, employment status, pension and insurance readiness; use it alongside this operational PAYE page.

If the business may struggle to meet payroll, tax or other obligations when due, address the position early and seek appropriate qualified support. Do not rely on an unconfirmed customer payment or a future funding application as cash for the first pay run. This guide is general information and does not calculate deductions or determine a business’s legal obligations.

Build a first-payroll control before registration

Registration is only one part of becoming an employer. Set the pay date, payroll cut-off, starter-information owner, pension assessment hand-off, approval step and HMRC payment process before the first employee is paid.

Keep evidence of the employer reference, payroll reports, employee details, statutory payments and corrections in one restricted-access location. Reconcile the payroll submission to the bank payment and accounting record rather than assuming a successful software run completed every obligation.

If the business pays an employee before the payroll setup is ready, or cannot correct a submission confidently, use current HMRC guidance and qualified payroll support promptly.

What to do, in order

1. 1

   Confirm the worker and payment facts

   Use current employment-status guidance and identify the proposed first payday, pay frequency and role costs.

2. 2

   Register at the right time

   Register with HMRC before first payday, within the current registration window, and store the employer details securely.

3. 3

   Choose and configure the payroll route

   Set up PAYE Online access and a payroll process that records details, calculates deductions and makes required reports.

4. 4

   Collect starter information

   Get employee information and a P45, or use HMRC’s starter checklist where a P45 is unavailable.

5. 5

   Run, report and fund the first payroll

   Pay the employee, submit the Full Payment Submission on or before payday, and plan the HMRC payment from cleared cash.