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Registering as an employer

Updated on 15 July 2021

Taking on an employee

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.

Illustration of an elderly woman at a desk using a laptop computer

In what circumstances do I need to register as an employer with HMRC?

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) (£120 per week in 2021/22). This is the same as £520 a month or £6,240 a year. For an example of how the LEL threshold works, see below.
  • The employee already has another job.
  • They are 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, £9.50 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 section 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.

You can find out more about registering as an employer on GOV.UK.


Example of registration requirement

The LEL for 4-weekly paid employees is £480. If your employee was paid on a 4-weekly basis and within a 4-week period, their wages were £121, £97, £120 and £80 (totalling £418) then there would be no registration requirement because the £480 threshold has not been breached, notwithstanding that in some individual weeks their wages were at or above £120 (provided they were genuinely earning their wages over the 4-weekly period – and not being paid weekly). If within those weeks, your employee's wages were £120, £118, £129 and £115 (totalling £482) then there would be a registration requirement because the £480 threshold has been exceeded.

If your employee was paid weekly, then there would be a registration requirement in both scenarios.


Is there a 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 up to 2 weeks for HMRC to process the registration. However, you cannot register more than 2 months before you start paying people.

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 a few 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 dedicated 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.

It will help if you have the following details ready when registering:

  • your name and address
  • contact details, for example telephone number, email address
  • type of business (for example sole trader)
  • number of employees you expect to employ
  • date of first payday (if known)
  • your National Insurance number

Registering as an employer for online filing

STEP 1

Most ‘business’ employers can register online. Exactly how you do this depends on how you run your business, for example as a sole trader or limited company, and whether not you already have an HMRC Online Services account.

Assuming you are a sole trader and already have an HMRC Online Service Account (for example, as an ‘individual’, to file your Self Assessment tax return), you are asked to complete a form to register, which sends an automated secure email to HMRC with the details. If you don’t have an HMRC Online Services Account already set up, you will need to create Government Gateway log in details/verify your identity to access the form.

Note that to use the 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 to register, so we suggest you contact HMRC's New Employer Helpline. Some employers, such as care and support employers, must register as an employer by phone.

Once you have registered, HMRC will issue you with your:

  • Accounts Office reference (example 123PA00045678)
  • 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.

STEP 2

Once you have your PAYE and Accounts Office references (see step 1 above), you may then need to register for PAYE Online for employers. 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 may need to register as a new user if you already have an HMRC Online Services account which relates to you in your individual capacity, for example for Self Assessment. This is because this will be an account for you as an individual and for ‘PAYE Online for employers’ you need an account as an organisation – see more on this below.

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 and 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.

STEP 3

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.

Registering as an employer for paper filing

STEP 1

Check our filing options section to make sure HMRC will let you use the paper option.

STEP 2

Phone HMRC's New Employer Helpline and tell them that you want to register as a paper filing employer.

The HMRC adviser should talk with you about 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)
  • 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’.

In order 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 can advise that this is not the case – 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 I 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 per se, 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 section getting things wrong.

Cancelling your PAYE registration

If you stop being an employer or your employee(s) starts earning below the relevant LEL (and you expect it to be permanent) then you should inform HMRC so that they can close your PAYE record. You can usually do this when you send your last lot of payroll information to HMRC. You can find out more on stopping being an employer on GOV.UK.

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.