The short answer: before you hire, check the person really will be an employee, make sure you can pay them through payroll, check their right to work, arrange a workplace pension and a written contract, and tell HMRC about them on or before their first pay day.
Step by step
- Check they are an employee. Employees, contractors and agency staff are treated differently for tax and employment rights. Get this right first.
- Get ready to employ. Complete the setup HMRC requires for a first-time employer, including how you will run payroll.
- Recruit fairly. Advertise the role and interview candidates in a way that is fair, and make any reasonable adjustments people need.
- Check the right to work. You must check that anyone you hire is allowed to work in the UK before they start.
- Consider whether the job needs a criminal record check (a DBS check). Not every role does.
- Arrange a workplace pension. The Pensions Regulator has a tool to show what you need to do.
- Give them a written contract that covers pay, including at least the minimum wage, and other terms.
- Tell HMRC about the new employee. You must do this on or before their first pay day. You will need their P45 from their last job, or you can use a starter checklist if they do not have one.
Running payroll
After that you pay staff through payroll, take off the right tax and National Insurance, and report payments to HMRC through Real Time Information. Payments of PAYE are due to HMRC by the 22nd of the next tax month if you pay electronically. Our payroll service can take all of this off your hands.
Common mistakes
- Treating someone as self-employed when they are really an employee
- Not telling HMRC in time
- Forgetting the pension duties
- Paying below the minimum wage
- Not keeping payroll records
Sources: gov.uk, employing someone and paying PAYE tax, checked 25 September 2026. For employment law, see Acas.
Common questions
Do I need payroll software?
Employers report to HMRC through Real Time Information, and most use payroll software for this. We can also run your payroll for you.
What if a new employee has no P45?
You can use a starter checklist instead. We can help you complete it correctly.
Do I have to offer a pension?
Most employers have workplace pension duties. The Pensions Regulator tool tells you what applies to you, and we can help with the setup.
General information only, not personal advice. Tax rules, rates and thresholds change, so check gov.uk or speak to us about your own situation.