Hiring your first employee is a sign the business is working. It also brings new responsibilities, most of which need to be in place before the first payday.
Before they start
- Check their right to work in the UK and keep a copy of the evidence.
- Give them a written statement of employment particulars on or before their first day.
- Get employer’s liability insurance — it is a legal requirement for most employers, with at least £5 million of cover.
Register and set up payroll
- Register as an employer with HMRC. You can do this up to four weeks before the first payday.
- Use payroll software to report pay to HMRC in real time, on or before each payday.
- Pay employees at least the National Minimum Wage. From April 2026, the National Living Wage for workers aged 21 and over is £12.71 an hour.
- Pay PAYE and National Insurance to HMRC by the 22nd of the following month if you pay electronically.
Employer National Insurance
Employers pay 15% National Insurance on earnings above £5,000 a year. Employment Allowance can reduce the bill for many small employers, so check whether you qualify.
Workplace pension
Automatic enrolment duties start from the employee’s first day. Eligible staff — aged 22 to State Pension age and earning over £10,000 a year — must be enrolled into a qualifying pension, with a minimum total contribution of 8% of qualifying earnings, at least 3% from you. You also need to complete a declaration of compliance with The Pensions Regulator.
Keep the records
Keep payroll records for at least three years after the end of the tax year they relate to.
How we help
We register you as an employer, run payroll every pay period, send payslips, handle pension enrolment and tell you exactly what to pay HMRC each month.
This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.
