PAYE and payroll for employers.

What is PAYE?

PAYE means Pay As You Earn. Employers use payroll to calculate deductions from employees’ pay and report the figures to HMRC. The deductions normally include Income Tax and employee National Insurance. The employer also calculates employer National Insurance where applicable.

How is PAYE calculated?

Payroll starts with gross pay for the pay period. It applies the employee’s tax code, taxable pay, Income Tax thresholds and National Insurance rules, together with pension deductions, statutory payments and benefits reported through payroll.

For 2026 to 2027, the standard Personal Allowance is £12,570. In England, Wales and Northern Ireland the basic, higher and additional Income Tax rates are 20%, 40% and 45%. Most employees pay Class 1 National Insurance at 8% between £242 and £967 a week, then 2% above £967. Employers normally pay 15% above the £481 weekly secondary threshold.

Employer responsibilities.

• Register as an employer before the first payday or when required by HMRC.
• Set up payroll records for every employee.
• Collect starter information and use the correct tax code.
• Calculate pay, deductions and employer National Insurance.
• Send a Full Payment Submission to HMRC on or before payday.
• Pay HMRC by the applicable deadline. Electronic payment normally needs to reach HMRC by the 22nd of the following month.
• Provide payslips and keep payroll records.
• Report starters, leavers, statutory payments and pension deductions.

Employee responsibilities.

• Give the employer accurate starter information.
• Check payslips and raise errors promptly.
• Tell HMRC when personal circumstances affect tax information.
• Provide relevant details for benefits, pensions or statutory payments.
• Keep personal records and review the tax code shown on payslips.

How to register for PAYE.

1. Confirm that the business is employing people and identify the expected first payday.
2. Gather the employer’s legal, contact and business details.
3. Apply to HMRC for an employer PAYE reference and Accounts Office reference.
4. Set up payroll software or appoint a payroll provider.
5. Collect employee starter information and prepare the first payroll.
6. Submit payroll information to HMRC on or before payday.

Swift Accountancy can register an employer PAYE scheme for £75.

Set up HMRC online services as an employer.

Use the Government Gateway or another approved HMRC sign-in route to access employer services. Add the PAYE service to the employer’s business tax account, check the business details and make sure the person responsible for payroll has the correct access. Do not share personal login details.

Related guides.

Check rates, thresholds and deadlines for the correct tax year before you rely on them.