PAYE Registration Guide: How to Register as an Employer

Taking on your first employee — or paying yourself as a director for the first time — usually means registering as an employer for PAYE with HMRC. The rules for exactly who needs to register catch more situations than most people expect, and the timing matters more than it might seem, since HMRC's references can take up to two weeks to arrive. This guide walks through exactly what to do and when.

Who Needs to Register for PAYE?

You need to register as an employer for PAYE if any of the following apply to an employee you're paying:

• You pay them £123 or more a week (the 2026/27 Lower Earnings Limit) — even a single employee earning above this threshold triggers registration.
• They earn less than that, but have another job elsewhere.
• They're receiving a pension alongside their pay from you.
• You're providing expenses or benefits (a company car, private medical insurance, and so on) alongside their pay.
• They're a company director, regardless of how much they're paid — this is a common trap for new one-person limited companies, covered in more detail below.

If none of these apply and you're paying a single employee below the Lower Earnings Limit with no other job, pension, or benefits involved, you may not need to register — though it's worth double-checking your specific situation, as the rules have enough edge cases that assuming you're exempt without checking is a common and costly mistake.

Interactive: Do I Need to Register?

Tick anything that applies to the employee (or director) you're paying, then check your result.

When to Register

You can register up to 2 months before your first payday, but not earlier than that — HMRC won't process a registration far in advance of when you'll actually start paying someone. On the other end, you should register with enough time for HMRC to process your application before that first payday, ideally with a comfortable margin.

HMRC aims to send your Employer PAYE Reference and Accounts Office Reference within around 5 working days of registering, though it can occasionally take up to 2 weeks. Because these references arrive by post, allow extra time on top of the processing itself. As a practical rule of thumb, registering 4 to 6 weeks before your first payday gives a comfortable safety margin rather than cutting it fine.

How to Register: Step by Step

1. Check you actually need to register, using the criteria and checker above.
2. Gather your details: your business name, address, the date you started (or will start) employing people, your estimated number of employees, and your Unique Taxpayer Reference (UTR) if you have one.
3. Register online through HMRC's PAYE Online service (linked to your Government Gateway account), or ask your accountant or payroll provider to register on your behalf using HMRC's agent authorisation process.
4. Wait for your references — an Employer PAYE Reference (format: three digits, then a forward slash, then a mix of letters and numbers) and an Accounts Office Reference, both needed to run payroll and pay HMRC.
5. Set up payroll software using your new references, ready to submit your first Full Payment Submission (FPS) on or before your first payday.

What You'll Receive

Once registered, HMRC issues two key reference numbers you'll use for the life of the business (or until you close the PAYE scheme):

• Employer PAYE Reference — identifies your PAYE scheme specifically, used on payslips, P60s, and most payroll correspondence.
• Accounts Office Reference — used specifically when actually paying HMRC the tax and NI you've deducted through payroll.

Keep both somewhere accessible — you'll need them every time you set up new payroll software, bring on a new payroll provider, or contact HMRC about your PAYE scheme.

What Happens If You Register Late

Registering late doesn't just risk a direct penalty from HMRC — it more immediately risks your ability to run payroll correctly and submit your Full Payment Submission (FPS) on or before each payday, since you can't submit an FPS without your Employer PAYE Reference. A late or missing FPS carries its own separate late-filing penalties, which can stack up if the underlying registration delay pushes back several pay periods.

If you've already paid someone before your registration comes through, keep clear records of what was paid and when, so you can report it correctly once your references arrive, rather than trying to reconstruct payroll history after the fact.

Directors: A Special Case

Company directors are treated differently from ordinary employees for PAYE purposes. If you're a director taking any salary from your own limited company — even a very small one, even if you're the only person in the company — you generally need to register for PAYE, regardless of whether your salary is below the standard Lower Earnings Limit that would exempt an ordinary employee. This catches out a lot of new one-person limited companies who assume that a small director's salary doesn't require the same registration as hiring "proper" staff.

If you're planning to pay yourself a small salary plus dividends — a common and tax-efficient structure for owner-directors — you'll still typically need to register for PAYE to process that salary correctly, even though the dividend portion is handled separately through Self Assessment rather than payroll.

Doing It Yourself vs Using an Accountant

Registering for PAYE yourself is entirely free and, for a straightforward single-employee or single-director setup, usually takes no more than 15-20 minutes online once you have your details ready. Many new business owners choose to do this step themselves even if they plan to hand ongoing payroll processing to an accountant or bureau afterwards, simply because it's quick and doesn't require specialist knowledge.

That said, if you're setting up payroll alongside other new-business admin — registering the company itself, setting up a business bank account, registering for VAT, sorting out a workplace pension scheme — bundling PAYE registration into a wider onboarding service from an accountant can save time and reduce the risk of missing a related step, particularly the automatic enrolment pension duties that follow closely behind hiring your first employee. Most accountants can register PAYE on your behalf as your appointed agent, usually as part of a standard new-client onboarding package rather than a separate fee.

Frequently Asked Questions