How do I register as an employer and run payroll?

England and Wales: This page sets out the position in full. Scotland: the same position, with no difference in principle — registration and payroll run through HMRC across the UK. Northern Ireland: the same position, with no difference in principle, for the same reason.

Registering as an employer: the order things happen in

Registering as an employer is a plain sequence, and HMRC runs it the same way in England and Wales, Scotland and Northern Ireland. This step is for the treasurer or manager, with the charity’s accountant if it has one. It follows deciding the person’s employment status.

1. Register as an employer with HMRC before the first payday. You can do it no more than 2 months ahead, so do not register the moment a grant is awarded. Register once you know when the first payday will be.
2. Get your employer reference. HMRC sends it once the registration goes through. You need it to report pay.
3. Choose a payroll system. For the smallest employers, HMRC’s free Basic PAYE Tools may be all you need.
4. Report every payday. Each time you pay anyone, you send HMRC a Full Payment Submission, called an FPS.
5. Send an Employer Payment Summary when you need to. This return, the EPS, carries claims and adjustments — including your claim for Employment Allowance.
6. Pay HMRC. You pay over the tax and National Insurance you deducted, plus the employer’s own National Insurance, by HMRC’s monthly deadline. The deadline is the 22nd of the next tax month if you pay electronically, or the 19th if your cheque goes by post. Employers who usually pay less than £1,500 a month may be able to pay quarterly instead.

The duty to register does not depend on how many people you pay. It applies even if the only person on the payroll is yourself. It is separate from registering the charity with HMRC for its tax reliefs, which is covered on register with HMRC for tax status.

If the reference has not arrived by payday

Pay your employee on time even if HMRC’s employer reference has not arrived. It happens. Run the payroll, keep the records, and send the FPS late once the reference arrives.

Do not hold back someone’s wages because of a delay at HMRC’s end. The late report is the smaller problem, and you can explain it. Paying late is a problem with your employee, and it is one you chose.

Employment Allowance is claimed, not given

Employment Allowance has to be claimed through the Employer Payment Summary: HMRC does not apply it automatically. Costing the post explains why it matters to a charity’s budget. It lets an eligible employer reduce its employer National Insurance bill by up to £10,500 a year. Charities qualify through their own gateway.

A charity that files only the FPS each month, and never sends an EPS, pays the full employer National Insurance bill and gets nothing back.

Make the EPS claim part of setting up payroll, not something to remember later.

Set the payroll up on the current rates

Employer National Insurance is charged on pay above the secondary threshold: £96 a week, or £417 a month. Both the threshold and the rate changed under the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025, and they have stayed the same since.

If you are using payroll software, it will hold the current figures. The risk is a spreadsheet or template copied from an older year, or from another organisation. That gets the employer bill wrong every single month until someone notices. Check the figures against HMRC’s rates page before the first run, and again every April.

You may not need to buy payroll software

HMRC offers free payroll software, Basic PAYE Tools, for the smallest employers. It handles the FPS and the EPS. Many small charities buy commercial software or a payroll bureau they do not need.

HMRC offers it to businesses with fewer than 10 employees. Check HMRC’s page before you choose. Above that limit, or if you would rather not run payroll yourself, commercial software or a bureau is a market cost.

Once payroll is running, the paperwork for the person starting is next: make the offer, check the right to work, issue the written statement covers the offer, the right-to-work check and the written statement. The workplace pension also starts running through payroll, which is set up the workplace pension.

Common mistake: forgetting to claim Employment Allowance through the EPS

The FPS is the filing everyone knows about. The EPS is the one that carries the claim. The allowance is claimed, not applied automatically, so a charity that never files the EPS pays its full employer National Insurance bill.

Common mistake: running payroll on an old employer threshold and rate

Payroll templates get copied from year to year. The secondary threshold and rate changed with the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025. A stale template gets the bill wrong every month.

Worked example

Tollgate Youth CIO is about to pay its first employee.

The treasurer registers Tollgate as an employer once the start date and first payday are fixed, not when the grant letter arrives. The employer reference comes through, and she sets up HMRC’s free Basic PAYE Tools after checking that Tollgate is inside its limit.

On the first payday she sends an FPS. In the same month she sends an EPS claiming Employment Allowance. She checks the software’s employer National Insurance figures against HMRC’s current rates page, then diarises the payment to HMRC by the monthly deadline shown there.

Had the employer reference been late, she would still have paid the youth worker on time. She would have sent the FPS as soon as the reference arrived.