Registering as an employer
This page tells you about registering as an employer with HMRC. Please note that there are a handful of occasions when you do not need to register with HMRC, even if you are an employer, which are also explained.
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Circumstances when you need to register
You will need to register as an employer with HMRC if any of the following are true:
- You are paying your employee at or above the National Insurance Lower Earnings Limit (LEL) (£123 per week in 2023/24). This is the same as £533 a month or £6,396 a year. For an example of how the LEL threshold works, see the sub-heading below, Example of registration requirement.
- The employee already has another job.
- The employee is receiving a state, company or occupational pension.
- You are providing them with employee benefits.
What this means is that if you have only one employee, who works a few hours a week for you at say, £10.50 an hour, and has no other job or income, then the conditions above will not be met as their weekly earnings will be below the LEL and so you will not have to register as an employer or set up a Pay As You Earn (PAYE) scheme. This is because such an employee will not have a tax or National Insurance liability.
If you have several employees, none of whom meet the conditions above, then again, you do not have to register with HMRC. However, you may need to keep some basic information about such employees including how much you pay them – see our page on keeping records for more on this. You will also need to give them payslips and comply with your wider employer obligations.
On the other hand, if you have two employees, one of whom earns £100 a week (employee 1) and has no other income, and one of whom earns £175 a week (employee 2), then you will have to register as an employer with HMRC in respect of employee 2. Having an ‘active’ PAYE employer record open with HMRC because of employee 2 then means that you will be obliged to send information to HMRC about both employees, even though there is nothing to pay over to HMRC in respect of employee 1.
Timeframe for registering as an employer
If you need to register as an employer, you should do so in advance of the first payday. You should try and start the process in plenty of time, as it can take a few weeks for HMRC to process the registration. However, you cannot register more than 2 months before you start paying people.
Although not ideal, don’t panic if your registration is not processed in time for your first payday – the following workaround is set out on GOV.UK:
To pay an employee before you get your employer PAYE reference number, you should:
- Run payroll.
- Store your full payment submission.
- Send a late full payment submission to HMRC.
You can find out more about these things in our guidance on ongoing payroll tasks.
Before you register
There are two ways of running your payroll and sending information about payments you make to your employee to HMRC – online or on paper. HMRC require most people to send the information online using payroll software, however some employers can still use paper to send information to HMRC.
You can find out more about who qualifies for paper filing and the advantages/disadvantages of each option on our filing options page.
Once you know whether you are going to file online or on paper, follow the instructions below to register as an employer with HMRC. Most ‘business’ employers (which includes being self-employed with an employee) can register online. Note that to use the register as an employer tool, there does not seem to be an option to for an employer who is an individual and not employing staff in the course of a business (for example, employing a nanny) to register, so we suggest you follow the guidance below on registering by phone. Some employers, such as care and support employers, must register as an employer by phone so that HMRC can discuss what extra help they might need.
It will help if you have the following details ready when registering:
- your name and address
- contact details, for example telephone number, email address
- specific description of type of business being registered as an employer (for example ‘electrician’)
- number of employees you expect to employ
- date you want the PAYE scheme to start (‘today’ is the default)
- date of first payday (if known)
- your National Insurance number
Go to the register as an employer tool. Exactly how you register depends on how you run your business, for example as a sole trader or limited company, and whether or not you already have an HMRC Online Services Account.
Assuming you are a sole trader, you need to follow the instructions for ‘Other types of business’ in the register as an employer tool. If you already have an HMRC Online Services Account, you are given two options to register:
- You can register as an employer with HMRC by enrolling for PAYE Online for employers
- You can send your details to HMRC securely online using a register as an employer - sole trader form.
With the first option – note that you can only enrol for PAYE Online for employers to an ‘organisation’ account, so you will probably need to obtain new ‘organisation’ Government Gateway log in details/verify your identityto proceed with this option. This is discussed further on this page under the heading below, Registering for PAYE Online for employers if you already have an HMRC Online Services account.
With the second option, although the standalone form is also behind the Government Gateway, you appear to be able to complete the form with an ‘individual’ account, which you may already have (to complete a Self Assessment tax return, for instance). This then sends an automated secure email to HMRC with the details. You will need to register for PAYE Online for employers as a separate step (see Step 2).
Once you have registered, HMRC will issue you with your Accounts Office reference (example 123PA00045678) and PAYE reference (example 123/A246)
You must use your Accounts Office reference when making payments and contacting HMRC about payments. You should use your PAYE reference in all other contacts with HMRC and on all your payroll records, as this is your payroll reference. Keep them safe.
Once you have your PAYE and Accounts Office references (see Step 1 above), you may then need to register for PAYE Online for employers separately (you will need to do this if you use the standalone form to register as an employer, for example).
This service allows you to upload information about the payments you make to your employee over the internet direct to HMRC. You can also view your account including payments made, employer notices such as tax code notices, reminders and so on, which you may find helpful.
You will probably need to register as a new user rather than simply add PAYE Online for employers to an existing HMRC Online Services Account – see more on this under the heading below, Registering for PAYE Online for employers if you already have an HMRC Online Services account.
As part of registering, you will need to enter your name and email address, as well as your employer PAYE reference and Accounts Office reference.
You will be given a new Government Gateway User ID – write it down or take a screen print. You will need it to use the service and/or to make online payroll submissions. You will also need to create a password – make sure to keep it somewhere safe.
Now you must wait for a letter in the post. This will contain the Activation Code (a security measure) you need to access the service for the first time. This may take a week or two. Once you receive the Activation Code, follow the instructions that come with it to log in to your HMRC Online Services account.
You must activate your PAYE Online for employers service within 28 days of the date shown on the letter or the code will expire and you will have to request a new one.
Please note that other HMRC services you register for may require separate Activation Codes.
Register by phone
Phone HMRC's new employer helpline and tell them that you want to register as an employer.
Most of HMRC's helplines now use an automatic system when you first get through – a recorded voice asking you various questions. When you are asked by the automated system what you are calling about, you can say ‘Register as an employer’.
You will be asked if you are a business, agent or something else. You should be aware that in this context 'business' means employer and is the correct option to press even if you employ someone domestically in your home, and you do not consider yourself a ‘business’.
The HMRC adviser should talk with you about what support you might need and the different ways of running your payroll, that is, paper or online. If you have decided you want to use the paper option, you should make this clear to the HMRC adviser and be prepared to explain why if necessary (for example, because you meet the care and support employer conditions).
After you have registered, HMRC will send you a letter headed ‘New employer registration and reference numbers’ with an Accounts Office reference (example 123PA00045678) and a PAYE reference (example 123/A246). This is the only notification you will receive, so keep these details safe.
You must use your Accounts Office reference when making payments and contacting HMRC about payments. You should use your PAYE reference in all other contacts with HMRC and on all your payroll records, as this is your payroll reference.
Registering for PAYE Online for employers if you already have an HMRC Online Services account
You may already have an HMRC Online Services account – for Self Assessment perhaps. This will be held by you in your capacity as an ‘individual’.
To register for PAYE Online for employers, you will need to hold an HMRC Online Services account as an ‘organisation’ (HMRC assume every employer is a ‘business’). So you will have to obtain a new Government Gateway ID and password as an organisation. The User ID and password that you have as an individual should be retained so that you can continue to access your Self Assessment account.
You may have seen the guidance on that GOV.UK suggests that where you already have an account, it is a simple case of adding the ‘PAYE Online for employers’ service. However, we understand that this is not the case and that you cannot add PAYE Online for employers to your existing individual online account.
When you want to access your PAYE Online for employers service (once it is set up), you can log in via GOV.UK. You can find information on what to do if you forget your User ID, password or have other problems signing in there too.
What happens if you register late
If you do not register with HMRC before you pay your staff for the first time, then there are not any late registration penalties as such. However, it follows that you will not have made the necessary payroll submissions to HMRC on time, and possibly not paid the tax due on time either. Both of these carry the possibility of interest and penalties. Therefore, you should correct this and register as soon as possible if you need to. For further details, see our page on getting things wrong.
Cancelling your PAYE registration
You should inform HMRC so that they can close your PAYE record if:
- you stop being an employer, or
- your employee(s) starts earning below the relevant LEL and you expect it to be permanent (for more on employees earning below the LEL, see our heading at the top of this page, Circumstances when you need to register).
You can usually inform HMRC when you send your last lot of payroll information to them. You can find out more on stopping being an employer on GOV.UK. This guidance also tells you what to do if you temporarily stop employing staff.
If you used to be an employer but no longer are and it is permanent, it is important to tell HMRC. If HMRC are expecting you to send in payroll information (because they are unaware that you are no longer an employer), then they can make estimates of what you owe based on prior filings.
If things change, for example, you start to employ someone again, you must let HMRC know straight away. They will then set up a new PAYE scheme and issue you with a new reference number.
You can find out more about registering as an employer on GOV.UK.