You have agreed a start date with your first hire, or you have decided to pay yourself a salary through your limited company. Before that first payday, HMRC needs to know you are an employer. PAYE registration is the step that sets up your PAYE scheme and gets you an employer PAYE reference, and without it you cannot report pay to HMRC.
This guide covers who has to register, how the online application works, what the reference letters mean, and what has to be in place before you run payroll. It is general information, not advice for your business.
Do you need to register?
You normally need to register with HMRC when you start employing staff, and GOV.UK is clear that this includes employing only yourself, for example as the sole director of a limited company.
HMRC’s payroll guidance lists the situations where PAYE applies to an employee in the current tax year. Any one of these is enough:
- they are paid £96 or more a week
- they get expenses or company benefits
- they are receiving a pension
- they have had another job since 6 April
- they have received Jobseeker’s Allowance, Employment and Support Allowance or Incapacity Benefit
The £96 figure matches the employer National Insurance threshold for 2026 to 2027, which is £5,000 a year in HMRC’s rates and thresholds. Many director salaries are set around these thresholds, so if you are the only person on the payroll and none of the conditions apply, check with your accountant whether you need to run PAYE yet. Our guide to director salary and dividends for 2026/27 covers how that salary is usually chosen.
PAYE registration is about your business as an employer. It does not replace your own Self Assessment if you have other income to report.
When to register
Register before the first payday. You cannot register more than two months before you start paying people, so the practical window is the eight weeks or so before that date. Registering in that window gives the reference letter time to arrive before you need to file.
How to register online
Most limited companies with between one and nine directors can register online. Other business types are directed to a separate part of the same GOV.UK guide.
- Start from the Register as an employer page and check your business is eligible for the online service.
- Sign in with the business’s Government Gateway user ID, or create sign-in details if it does not have them yet.
- Have your company details to hand before you begin. It helps to have ready your company registration number, your Corporation Tax Unique Taxpayer Reference, the registered office address, details for each director and the date you plan to pay people for the first time.
- Answer the questions about the business and the people you will pay. If you stop part-way, GOV.UK lets you return and continue an application you have already started.
- Submit, then use HMRC’s checker on the same page to see when to expect your letter.
The two references HMRC sends you
After registration HMRC writes to you with two different numbers. They look similar at a glance and are easy to mix up, which causes problems later when payments land against the wrong reference.
| Reference | What it looks like | What it is used for |
|---|---|---|
| Employer PAYE reference | A 3-digit tax office number, a slash, then up to 10 letters and numbers, for example 123/AB456 | Identifies you as an employer on payroll reports, and appears on employees’ P60s |
| Accounts Office reference | 13 characters: 3 numbers, P, a letter, then 8 numbers or 7 numbers and an X, for example 123PX00123456 | Used when you pay HMRC what you owe for PAYE and National Insurance |
Both formats are taken from HMRC’s own service design standards. Keep the letter somewhere safe and give both numbers to whoever runs your payroll.
If your first payday is close and nothing has arrived, call HMRC’s employer helpline on 0300 200 3200, Monday to Friday, 8am to 6pm. They can give general help even before you have your references to quote.
Activate PAYE Online
If you registered online, HMRC enrols you in PAYE Online automatically and posts an activation code within 10 days. You must activate within 28 days of the date on the letter, not the date it arrives. Miss that and you have to enrol again, which means waiting for another letter.
PAYE Online is where you see what you owe, make payments, check your payment history, receive tax codes and notices for your staff, and get alerts if a report or payment is late. If you registered by phone or post, you need to enrol separately.
Before your first payday
You report pay through Real Time Information, sending a Full Payment Submission on or before each payday. That needs HMRC-recognised payroll software or a payroll provider. If your books are already in Xero, running payroll in the same system keeps wages, National Insurance and the HMRC liability in one ledger.
PAYE and National Insurance are due by the 22nd of the following tax month if you pay electronically, or the 19th if you pay by cheque. Small employers who expect to pay less than £1,500 a month can pay quarterly instead. Use the Accounts Office reference on every payment.
For 2026 to 2027, employer National Insurance is 15% on earnings above £5,000 a year for most employees, with lower rates for some groups such as employees under 21 and apprentices under 25. Eligible employers can reduce their bill with Employment Allowance of up to £10,500 a year, though not every business qualifies, so check before you rely on it.
Your workplace pension duties start as soon as your first member of staff starts work. You will also need to check right to work, and in most cases you must have employers’ liability insurance from the day you become an employer, covering at least £5 million. The main exception for a limited company, per HSE guidance, is a company whose only employee is its owner, holding 50% or more of the shares. The close-family exemption does not help here: it does not apply to family businesses incorporated as limited companies.
Questions new employers ask
Is PAYE the same as Income Tax?
No. PAYE is the system employers use to take Income Tax and National Insurance from wages and pass it to HMRC. Your employees still pay Income Tax; you collect it through payroll instead of them paying it separately.
Can I register as an employer before I hire anyone?
Yes, but not too early. You must register before the first payday, and you cannot register more than two months before you start paying people.
How do I find my employer PAYE reference?
It is on the letter HMRC sent when you registered and on later HMRC letters about PAYE. Employees will also see it on their P60. If you cannot find it, the employer helpline can give general help, though it can do more once you can pass its security checks.
Do I need to register if I am the only director?
GOV.UK says to register even if the only employee is you as a director. Whether PAYE then applies in practice depends on your salary and the conditions above, so it is worth agreeing your salary level with your accountant first.
Getting payroll set up with eAccounts
eAccounts is a Xero Platinum Partner, and payroll and pensions sit alongside the bookkeeping, VAT returns and year-end accounts we already run for UK businesses. That covers managed payroll, Xero payroll and workplace pension auto-enrolment, so your first payday does not become an HMRC problem.
If you are about to take on your first employee or start paying yourself a salary, get a quote.
Lewis shares practical guidance for UK businesses on accounting, tax and digital compliance.
