Hiring your first employee: payroll, pensions and right to work

Register for PAYE with HMRC. Allow time for the accounts office reference and PAYE reference to arrive; you cannot file an RTI submission without them.

Carry out and record a right to work check before employment starts, using the online service for most non-UK nationals or original documents for British and Irish citizens. Keep a dated copy for the duration of employment plus two years.

Issue a written statement of employment particulars on or before the first day, and arrange employers' liability insurance of at least £5m — it is a legal requirement with a daily fine for going without.

Report pay and deductions to HMRC on or before each payday through a Full Payment Submission. Late submissions attract penalties per month based on employee numbers.

Check the National Minimum Wage rate for the employee's age band, and remember that unpaid trial shifts, unpaid training time and deductions for uniform can all create an underpayment.

Duties start the day your first employee begins. Assess them: anyone aged 22 to State Pension age earning over £10,000 a year must be automatically enrolled, and others have the right to join.

Minimum contributions are 8% of qualifying earnings, of which the employer must pay at least 3%. You must set up a qualifying scheme, write to staff and complete a declaration of compliance with The Pensions Regulator within five months of your duties start date, even if nobody needs enrolling.

Budget for gross pay, employer National Insurance at 15% above £5,000, employer pension contributions, holiday of at least 5.6 weeks including bank holidays, statutory sick pay and the administration.

Check whether the Employment Allowance is available — a company that previously had only a single director may become eligible once a second person is paid above the threshold.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.