Published: 01 Jul, 2026Payroll

First-Time Employer Payroll Setup: UK PAYE Checklist 2026/27

Hiring your first employee means payroll becomes a legal workflow, not just a bank transfer.

You need to register as an employer with HMRC, choose payroll software, collect starter information, calculate tax and National Insurance, give payslips, report pay through Real Time Information, and check workplace pension duties.

This checklist gives first-time UK employers a practical setup path for 2026/27.

Quick checklist

Before your first payday, make sure you have:

Checked the worker's employment status.
Registered as an employer with HMRC if required.
Chosen HMRC-recognised payroll software or a payroll provider.
Collected starter details, P45 or starter checklist information.
Set the employee's pay frequency and payday.
Set up tax code, National Insurance category, student loan details, and pension status.
Checked National Minimum Wage and working time records.
Prepared a payslip.
Sent a Full Payment Submission on or before payday.
Checked what you owe HMRC after submission.

1. Check whether you need to register as an employer

GOV.UK says you normally need to register as an employer with HMRC when you start employing staff, or when you use subcontractors for construction work.

You must register even if you are only employing yourself, for example as the only director of a limited company.

GOV.UK says you must register before the first payday to get your employer PAYE reference number, and you cannot register more than 2 months before you start paying people.

If you need to pay an employee before the PAYE reference arrives, GOV.UK says you should run payroll, store the Full Payment Submission, then send a late FPS to HMRC once you receive the reference.

2. Choose how you will run payroll

You can run payroll:

in-house using payroll software;
through an accountant;
through a payroll bureau;
with an integrated payroll and workforce system.

For a first-time employer, the key question is not only "can it calculate pay?" It is whether the process handles the whole employer workflow:

employee records;
pay and deductions;
payslips;
FPS and EPS submissions;
pensions;
holiday and absence;
expenses and mileage;
leavers and year-end records.

Workmax is built for employers who want payroll, HR, time, holidays, expenses, and care operations to stay connected as the team grows.

3. Collect starter information

Before the first pay run, collect:

full legal name;
address;
date of birth;
National Insurance number, if available;
start date;
pay rate and pay frequency;
bank details;
P45, if the employee has one;
starter checklist details if they do not have a P45;
student loan or postgraduate loan information;
pension assessment information;
right-to-work evidence and contract records.

Keep records secure and limit access to people who need them for payroll or HR duties.

4. Set up pay, deductions, and contributions

Payroll needs to calculate:

gross pay;
Income Tax;
employee National Insurance;
employer National Insurance;
student loan deductions, where relevant;
pension contributions;
statutory payments, where relevant;
taxable benefits or payroll adjustments, where relevant.

If the employee is hourly paid or shift-based, make sure approved hours reach payroll before the pay run is submitted.

Useful tools:

5. Check workplace pension duties

The Pensions Regulator says every UK employer has automatic enrolment duties if they employ at least one person.

That does not mean every worker is automatically enrolled immediately, but it does mean the employer must assess staff, communicate correctly, and put eligible staff into a qualifying pension scheme when required.

Payroll should track:

duties start date;
worker age;
earnings;
postponement, if used;
pension scheme membership;
employee and employer contribution rates;
opt-in, join, and opt-out records.

Do not leave pensions until the first payroll is already closed.

6. Prepare the first payslip

Employees must receive a payslip showing pay and deductions. A clear payslip helps reduce pay questions and gives the employee a record of how their pay was calculated.

Before payday, check:

gross pay;
tax code;
National Insurance category;
pension deductions;
student loan deductions;
net pay;
payment date;
year-to-date figures;
hours, if the employee is paid by time worked.

7. Send the FPS on or before payday

GOV.UK says payroll software sends a Full Payment Submission to HMRC to report payments and deductions.

The FPS should be sent on or before the employee's payday. GOV.UK says the FPS should include everyone you pay, even if they earn less than GBP 96 a week.

After sending the FPS, employers can view the tax and National Insurance owed in their HMRC online account from the 10th of the next tax month. If you need to claim a reduction, for example for statutory pay, you may need to send an Employer Payment Summary.

8. Pay HMRC and keep records

After payroll is submitted, make sure you:

pay employees;
publish or send payslips;
pay HMRC on time;
submit pension contributions;
keep payroll records;
update employee records for changes;
review any payroll errors quickly.

Payroll is not finished when the payslips are generated. It is finished when the reporting, payments, pension follow-up, and records are complete.

Common first-time employer mistakes

Avoid these early payroll mistakes:

waiting until payday to register for PAYE;
paying someone without storing the FPS information;
using the wrong starter declaration;
missing student loan details;
forgetting workplace pension duties;
not checking National Minimum Wage for hourly staff;
submitting FPS late;
treating reimbursed expenses as simple net pay without checking tax rules;
keeping payroll data in disconnected spreadsheets.

How Workmax helps first-time employers

Workmax helps employers move from hiring to payroll without building a spreadsheet process first.

You can connect employee records, time tracking, holidays, expenses, approvals, payroll checks, payslips, and RTI submissions in one workflow. That gives first-time employers a cleaner path from the first employee to a scalable payroll process.

Useful next steps:

Official sources checked

This article was refreshed against the following official sources on 1 July 2026:

Bottom line

First-time employer payroll is easiest when you treat it as a checklist.

Register before the first payday, collect the right starter information, run payroll through reliable software, send the FPS on or before payday, check pensions, and keep records that will still make sense when the team grows.