UK Employer Payroll — PAYE, RTI & NIC

Confirm the employer is registered with HMRC for PAYE and has a PAYE reference and Accounts Office reference. Set up payroll software that supports RTI submissions. Collect employee starter information (P45 or starter checklist) and confirm bank details for BACS payments. Establish payroll frequency (weekly, fortnightly, or monthly) and auto-enrolment staging or duty date.

Collect a P45 from each new starter or complete a Starter Checklist (formerly P46) if no P45 is available. Assign the correct tax code (1257L cumulative is standard for 2025-26; use week-1/month-1 if directed). Confirm student loan plan type (Plan 1, Plan 2, Plan 4, or Postgraduate Loan) for any applicable deductions. Record National Insurance category letter (A, B, C, H, J, M, or Z) for each employee.

For each pay period, calculate gross pay including regular salary, overtime, commission, and any taxable benefits in kind. Compute PAYE income tax using the employee's tax code and the 2025-26 tax bands (20% on £12,571–£50,270, 40% on £50,271–£125,140, 45% above £125,140). Calculate Class 1 employee NIC at 8% on earnings between the Primary Threshold (£12,570/yr) and Upper Earnings Limit (£50,270/yr), and 2% above. Calculate Class 1 employer NIC at 15% on earnings above the Secondary Threshold (£5,000/yr for 2025-26), reduced by Employment Allowance (up to £10,500) if eligible. Apply student loan deductions and workplace pension contributions (auto-enrolment minimum: 3% employer, 5% employee of qualifying earnings).

Submit a Full Payment Submission (FPS) to HMRC on or before each pay date. The FPS reports each employee's year-to-date gross pay, PAYE tax, NIC, student loan deductions, and payment date. If no employees are paid in a tax month (6th to 5th), submit an Employer Payment Summary (EPS) to inform HMRC. Submit an EPS also to claim statutory payment recovery (reclaiming SMP, SSP, etc.) or to notify HMRC of Employment Allowance, Construction Industry Scheme (CIS) deductions suffered, or apprenticeship levy offset.

Pay HMRC the combined PAYE income tax, Class 1 employee NIC, and Class 1 employer NIC for each tax month by the 22nd of the following month (or 19th if paying by post). Small employers paying less than £1,500/month may pay quarterly. Use the 13-character Accounts Office reference on all payments. Payments are made via bank transfer to HMRC's bank account (Cumbernauld or Shipley) or via Direct Debit.

At 5 April (tax year end), issue a P60 to every employee still employed on that date by 31 May. Submit a final EPS marking the year as complete. For any employees with taxable benefits in kind not payrolled (company car, private fuel, beneficial loans above £10,000, private medical insurance), prepare and submit P11D forms to HMRC by 6 July and issue copies to employees. Submit P11D(b) to report Class 1A NIC on benefits; pay Class 1A NIC by 22 July (19 July if by post).