When Do I Need to Register as An Employer and How do I Register?

how to register for PAYE

It is a must to get your hands to operate PAYE as an integral part of the payroll when you are in the role of an employer in the UK. PAYE is also known as pay as you earn. This is a system through which HMRC is able to collect income tax and national insurance from all the employees of your company. Once your company is PAYE registered, it will be easier for HMRC to directly deduct the amount of income tax from the salaries of the employees even before they receive it. The payments of national insurance and student loans are also deducted from the salaries of the employees in the same manner. By now you must be wondering how to register for PAYE.

Moreover, you are not required to get registered for PAYE if the employees of your company get less than the amount of £120 within the period of a week. Here we will take the example of an employee who is making £10 an hour by working over the weekends but his salary is not above the amount of £120 per week, Lower Earnings Limit will be considered and there will not be any requirement for PAYE registration again.


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When is the Right Time to Do it?

Before the first payday, the employer needs to get registered for PAYE as per the instructions of HMRC. This is because you will require a time of around five weeks to receive your PAYE reference number. This means you will have to consider that margin of five weeks before the payday and get registered. This does not mean that you go too early about the process, however, take a time period of around two months when you plan to hire and pay your staff members.


How to Register for PAYE?

When you are in the UK in the role of an employer, you will have to register for PAYE as an employer, generally, after that, you receive a unique reference number for your company’s PAYE system. In some of the cases where you are the only employee and also acting in the role of the employer, you will still be required to get registered for PAYE. Here have a look at how the registration process works for a limited company.

  1. You will have to begin your registration process with HMRC in the first step. You will be required to provide the UK national insurance number as an employer.
  2. HMRC will enquire about your location. In case of being the offshore employer, you will have to provide the relevant details.
  3. You will have to provide the list of your non-cash incentive awards.
  4. After a few questions from HMRC, you will finally be allowed to log into your complete registration.


What is the Requirement When You are Working as a Sole Trader or a Self-Employed Individual?

When you are in the role of a self-employed person who is carrying out business activities in the UK, or trading as a sole trader, there will not be any PAYE requirement for you as an employer. This is because when you get yourself registered as someone who is self-employed, you do not come under the category of an employer. You are free of any worries to get registered for PAYE before you aim to pay yourself the salary.

Now comes the case of an individual who is self-employed, however, works for an employer. Such cases tend to work for employers in the daytime and handle individual projects in the evenings generally. Now it is the responsibility of your employer to take all the worries about PAYE and get registered before they pay you, however, you, on the other hand, will be away from the obligations of getting registered for PAYE.


What if You are Required to Pay Employees Before PAYE Registration?

The best practice suggested by the experts is to get registered before time and consider the margin of days that you will have to wait for the reference numbers. However, in the case you are not in a position to wait for the reference number and you have to pay your employees, you need to take the following points into serious consideration:

  • The business payroll will be operational with the help of the preferred payroll software for this time.
  • You will be required to make a document of the full payment. Every time you make a payment to your employees, you will have to submit this document to HMRC. This is to prove the details of the national insurance number, tax, and student loan deductions for your employees.
  • After you have finally received your reference number, you will submit the late full payment document to HMRC.


The Bottom Line

Now that you have gathered a fair amount of information about how to register for PAYE, we say that it is not a very simple and easy process to go through when it comes to getting registered for PAYE with HMRC, as you will have to be very careful about the time margin, the reference number received, and other relevant requirements. If you fail to meet the standards of requirements, you will have to face serious consequences and fine penalties from HMRC. However, if you are trading as a sole trader or as a self-employed individual, you do not have to worry about any of such points. We hope these few minutes of reading have helped you to develop a better understanding.


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Disclaimer: All the information provided in this article on how to register for PAYE, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.