Taking on your first employee

Before they start

1. Register as an employer with HMRC. Do this before the first payday; it can take a couple of weeks for your reference to come through.
2. Check their right to work in the UK and keep a copy of the documents.
3. Take out employers’ liability insurance. It’s a legal requirement for most employers.
4. Give them a written statement of their terms from day one.
5. Collect their starter details: P45 or starter checklist, National Insurance number and bank details. Our clients can send these through our payroll starter form.

Paying them

From April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. Each time you pay them, payroll software works out their tax and National Insurance and reports it to HMRC on or before payday, under Real Time Information.

What it costs you

• Employer National Insurance: 15% on pay above £5,000 a year
• Employment Allowance: up to £10,500 off your employer National Insurance bill each year. Companies where the only employee is a director can’t claim it.
• Pension contributions: at least 3% of qualifying earnings

Workplace pension

Your auto-enrolment duties start on the day your first employee starts. Anyone aged 22 to State Pension age earning over £10,000 a year must be put into a workplace pension, with at least 8% going in, of which at least 3% comes from you. You then have five months to send The Pensions Regulator a declaration of compliance.

Or let us handle it

We register you with HMRC, set up payroll and the pension, run each pay run and send payslips. You just tell us about new starters, leavers and hours.

Common questions

This guide is general information, correct as of November 2026. Rules change and every situation is different, so speak to us before acting on it.