How to register as an employer with HMRC for PAYE

Before you can pay your first employee through payroll, you normally need to register as an employer with HMRC. Registration is free and done online, but the timing rules catch people out in both directions: register too late and you may not have your references by payday; try to register too early and HMRC will not accept the application. This guide covers who must register, when, what you receive, and what to do the moment registration completes.

Who must register as an employer

You must register with HMRC if any of the following applies to anyone you employ — including yourself, if you are the director of your own limited company:

• You pay them above the lower earnings limit. This is the National Insurance threshold at which payroll reporting duties begin. The figure changes over time, so check the current limit on GOV.UK rather than relying on a remembered number.
• They have another job — even if what you pay them is modest.
• They receive a pension alongside the pay from you.
• You provide expenses or benefits — a company car, private medical insurance, and similar.

In practice, most employers taking on a genuine member of staff will meet at least one of these conditions and need to register. If you truly fall outside all of them — say, one employee working a few hours below every threshold, with no other job or pension — you may not need a PAYE scheme yet, but you must still keep records of what you pay. The moment circumstances change, register.

Note that this is about employees. If the people you pay are genuinely self-employed contractors, PAYE does not apply to them — though construction contractors have separate CIS obligations, and employment status is judged on the reality of the working relationship, not the label on the invoice.

When to register: the timing window

Three rules govern the timing:

Rule	What it means in practice
Register before the first payday	Your reporting duties start with the first payment, so registration must be under way in good time
Allow up to 30 working days for your PAYE reference	Often quicker, but plan for the full window — you cannot file to HMRC without the reference
No more than 2 months before you start paying	HMRC will not accept a registration too far ahead of your first payday

Put together: the sweet spot is to register around four to eight weeks before your first payday. If you have left it late and payday arrives before your references do, do not delay paying your employee. Run the payroll, keep full records of the payment and deductions, and submit your first Full Payment Submission as soon as the reference arrives — HMRC’s guidance recognises this situation, and prompt filing once registered is what matters.

A worked example: suppose your new employee starts on 1 October and will be paid monthly on the last working day of the month. Their first payday is around 31 October, so the earliest you can register is the start of September, and a sensible target is the first half of September — leaving the full 30-working-day window before payday with room to spare. Registering in June for an October start would be rejected as too early; registering in the last week of October risks a payday with no reference in hand.

What you receive when you register

Successful registration gives you two references, and you will use both for as long as you employ anyone:

• Employer PAYE reference — a number in the format of a three-digit tax office code, a slash, and a scheme identifier. It identifies your payroll scheme on every FPS and EPS you send and appears on employee forms such as the P60 and P45.
• Accounts Office reference — a thirteen-character reference you quote whenever you pay HMRC, so your payments land against the right scheme. Paying without it (or with the wrong one) is a classic cause of HMRC chasing “unpaid” liabilities that were actually paid.

Keep both somewhere your payroll software and your accountant can see them. They are not interchangeable, and each has a distinct job.

Registering as a limited company vs sole trader

The PAYE scheme you end up with is the same, but the route differs slightly:

• Limited company: the company registers as the employer. You will need the company’s details, including its registration number and Unique Taxpayer Reference. A common first use is the company paying its own director a salary — that still requires a PAYE scheme if the pay or benefits meet the conditions above, even with no other staff.
• Sole trader or partnership: you register as an individual (or the partnership registers), using your own Unique Taxpayer Reference from Self Assessment. You are the employer personally; the scheme attaches to you rather than to a company.

In both cases you register through GOV.UK, and in both cases you will manage the scheme through an HMRC online account. Start at the official page: Register as an employer.

After registration: three things to do next

1. Enrol for PAYE Online

Your HMRC online services account for employers is where tax code notices, notifications and reminders arrive, and it is how your software authenticates when it files. Depending on how you registered, you may be enrolled automatically or need to add the PAYE for Employers service to your account — either way, activate it before your first submission is due.

2. Choose payroll software

All employer reporting to HMRC happens electronically in real time, so you need software that supports RTI — see our plain-English guide to Real Time Information for how the system works. HMRC’s free Basic PAYE Tools exists for very small schemes, but it does not produce payslips; most employers choose commercial software that calculates deductions, generates payslips and files in one pass.

3. Prepare your first FPS

The first real event in the life of your scheme is the first Full Payment Submission (FPS) — the report you must send to HMRC on or before each payday. Your first FPS carries your new employee’s starter details (from their P45 or starter checklist) along with the pay and deductions. From then on, the rhythm is fixed: every payday, an FPS on or before the payment.

One scheme covers all your employees

You register once, not once per employee. The PAYE scheme you set up for your first hire is the same scheme you will run your fifth and fiftieth employee through — adding a new starter is a payroll task (their P45 or starter checklist details go on your next FPS), not a new registration. The main exceptions are structural: if you take over an existing business you may inherit or need to replace its scheme, and groups sometimes run more than one scheme for separate parts of the organisation. For a typical small employer, one registration is the beginning and the end of it.

It also works in reverse: if you stop employing people altogether, tell HMRC and close the scheme rather than leaving it open. An open scheme with no filings generates automatic reminders, estimated liabilities and eventually penalties for returns HMRC believes are missing.

Common registration mistakes

• Registering too late and paying staff for weeks with no scheme in place. The fix is prompt registration and filing, but it is avoidable stress.
• Registering too early, more than two months before the first payment, and having the application rejected.
• Mixing up the two references — filing with one and paying with the other reversed.
• Forgetting the director. A one-person limited company paying its director a salary usually needs a PAYE scheme like any other employer.
• Assuming registration is the finish line. It is the start: pension automatic enrolment duties, payslips and record-keeping all begin with the first employee’s first day.

The short version

Register once you are within two months of your first payday; allow up to 30 working days for your employer PAYE reference and Accounts Office reference to arrive; enrol for PAYE Online; pick RTI-capable software; and be ready to send your first FPS on or before the first payday. For what happens next — the pay run itself, deductions, payslips and paying HMRC — carry on with our guide to running payroll for your first employee. Taxriva handles the steps after registration, from the first pay run to FPS and EPS filing with HMRC.