How Does a New UK Business Register for PAYE and Run Its First Payroll?

## The short answer

A new UK business that intends to pay employees must register as an employer with HMRC to operate PAYE, ideally before the first payday. Registration produces an **employer PAYE reference** and an **accounts office reference**, which you need to make submissions and pay HMRC. You then choose RTI-compatible payroll software, set up each employee with the correct tax code and starter details, run the first pay run, send a Full Payment Submission on or before payday, and pay any PAYE due to HMRC by the monthly deadline.

## When you need to register

You generally need a PAYE scheme as soon as you employ anyone who is paid above the relevant earnings threshold, has another job, receives a pension, or gets certain benefits. Even a single director taking a salary can trigger the requirement. Crucially, you should register **before** the first payday, because the references take time to issue and you cannot file RTI without them.

It is worth registering in good time rather than at the last minute, since the employer references arrive by post and online setup is not instant.

## What you receive after registering

Once registered, HMRC provides:

- An **employer PAYE reference** (used on submissions and payslips)

- An **accounts office reference** (used when paying HMRC)

- Access to PAYE Online and the ability to receive electronic coding notices

Keep these references secure and to hand; they are required by your payroll software and by anyone making payments on your behalf.

## Choosing payroll software

The software must be **RTI-compatible** so it can file FPS and EPS submissions directly to HMRC. When choosing, look for:

- Automatic FPS generation tied to the pay run

- Retrieval and application of HMRC coding notices

- Handling of National Insurance categories, pensions and student loans

- Auto-enrolment pension assessment for workplace pensions

- Clear payslips and an audit trail of HMRC acceptances

Manual or spreadsheet-based payroll is rarely worth the risk for anything beyond the very smallest scheme, because RTI timing and statutory calculations are unforgiving.

## Setting up your employees

For each new employee you need to gather and record:

- Full legal name, date of birth, address and National Insurance number

- A **P45** from a previous employer, or a completed **starter checklist** if none

- The correct tax code, derived from the P45 or starter declaration

- Pay rate, frequency and any deductions or benefits

- Pension and auto-enrolment status

The starter declaration is especially important: choosing the wrong statement leads to the wrong tax code and either over- or under-deduction in the first periods.

## Running the first pay run

The first run sets the pattern for everything afterwards. The sequence is:

1. Enter hours, salary and any variable pay

2. Let the software calculate PAYE tax, National Insurance, pension and other deductions

3. Review gross-to-net figures and the resulting payslips

4. Generate and send the **FPS on or before** the payday

5. Confirm HMRC has accepted the submission

6. Pay employees their net pay

Because RTI carries year-to-date figures, errors in the first run are best corrected promptly so the running totals stay clean.

## Paying HMRC

The tax and National Insurance you deduct, plus employer National Insurance, must be paid to HMRC for each tax month. Electronic payments are typically due by the 22nd of the following month. If you are entitled to the Employment Allowance against employer National Insurance, you claim it via an EPS, which reduces what you owe. Smaller schemes may be able to pay quarterly, but the default mindset should be monthly.

## Auto-enrolment: do not overlook it

Alongside PAYE, employers have duties around workplace pensions. You must assess employees for auto-enrolment, enrol those who qualify, make the required contributions, and complete a declaration of compliance with the Pensions Regulator. Payroll and pension setup should be tackled together, not as an afterthought, because the assessment depends on payroll data.

neart.ai builds enterprise-grade products in the HR and payroll space, and the pattern among new employers is consistent: the businesses that stay compliant are the ones that set up registration, software, tax codes and pensions as a single onboarding project before the first payday, rather than scrambling afterwards.

## Practical takeaway

Register for PAYE before your first payday, secure your employer and accounts office references, and pick RTI-compatible software. Onboard each employee with the correct starter details and tax code, run the first pay run carefully, file the FPS on or before payday, and pay HMRC by the monthly deadline. Tackle auto-enrolment in the same setup. Get the first run right and the rest becomes repeatable.