How PAYE works for employers

Register before the first paid payday

You need an employer PAYE reference before you pay staff. HMRC expects a Full Payment Submission on or before each payday under Real Time Information. Paying someone in cash and ‘sorting PAYE later’ is how underpayments and penalties start.

Directors are not exempt. A director taking a salary needs a payroll record even if they are the only worker. Dividends are not processed through PAYE.

What you deduct, and what you pay across

Income Tax, employee National Insurance and other deductions such as student loan or pension contributions (where operated through payroll) come off the payslip. Employer National Insurance and, where due, apprenticeship levy are extra costs for the business.

You pay HMRC on the usual 22nd of the following tax month, or quarterly if you are eligible and registered to do so. The payslip, the FPS and the bank payment should tell the same story.

• Issue a starter checklist and verify the National Insurance number.
• Keep holiday pay, statutory payments and deductions from wages documented.
• Year-end forms still matter even with RTI — check GOV.UK for the current P60 and P11D timetable.

Benefits and termination payments

Company cars, medical insurance and some loans are reported as benefits. Electric cars have their own percentage rules — see company car tax. Leaving payments can be taxable, exempt, or mixed. Do not guess from a forum thread.

Solaratax runs payroll for small employers or reviews a file you already operate. Talk to us before the first hire if you have never had a PAYE scheme.

Questions we are asked

Can I pay a family member without PAYE?

If they are genuinely employed, PAYE usually applies. If they are a partner, the partnership rules apply instead. Paying ‘cash for help’ with no records is a common enquiry trigger.

What is an Employer PAYE reference?

It is the reference HMRC gives your scheme, often shown as an office number and a reference. You need it for payroll software, CIS (in some cases) and many grant or finance forms. It is not your Corporation Tax UTR.

Do I still send P60s?

Employees should receive a P60 after the tax year if they were working for you on 5 April. Confirm the current method on GOV.UK — many are issued from payroll software rather than paper HMRC forms.