Employing staff for the first time brings real responsibilities — particularly around payroll and workplace pensions. Get it wrong and HMRC penalties can follow quickly.
Setting Up PAYE
Before paying any employee, you must register as an employer with HMRC and set up a PAYE scheme. HMRC will issue you a PAYE reference and an Accounts Office reference.
Real Time Information (RTI)
Under RTI, every employer must submit a Full Payment Submission (FPS) to HMRC on or before every payday. The FPS includes details of employees' pay, tax deducted, and National Insurance contributions.
If no payments are made in a period, you must submit an Employer Payment Summary (EPS) instead.
Missing RTI submissions leads to automatic late filing penalties.
National Insurance
Employers pay secondary Class 1 NI at 13.8% on earnings above the secondary threshold (£9,100 for 2024/25). Employees pay primary Class 1 NI at 8% between the primary threshold and upper earnings limit, then 2% above.
The Employment Allowance (currently £5,000 per year) can reduce your employer's NI bill — but some restrictions apply (director-only companies generally cannot claim it unless there are other employees).
Auto-Enrolment
Every employer must automatically enrol eligible employees into a qualifying workplace pension scheme. Eligible employees are aged 22 to State Pension Age, earning more than £10,000 per year.
Minimum contributions (2024/25):
- •Employer: 3% of qualifying earnings
- •Employee: 5% of qualifying earnings (total 8%)
You must use a qualifying pension provider — most employers use NEST, The People's Pension, or Aviva. You must also provide employees with the correct written notices and declarations.
Failure to comply with auto-enrolment can result in escalating fixed penalties from The Pensions Regulator.
Payslips
All employees (and workers) have a legal right to an itemised payslip on or before every payday. Payslips must show gross pay, net pay, and all deductions.
We Handle It All
We run payroll for businesses of all sizes — from single director payrolls to 50+ employee schemes. We submit RTI on time, manage auto-enrolment declarations, and make sure your year-end P60s are issued correctly.