Payroll for UK employers: PAYE, RTI, pensions and payslips

Payroll is the process of paying employees correctly and telling HMRC about it. Each pay run calculates gross pay, deducts income tax under PAYE and employee National Insurance, adds employer National Insurance and any pension contribution, and produces a payslip. The figures are then reported to HMRC through Real Time Information, known as RTI. This guide explains the reporting cycle, the 2026 to 2027 National Insurance numbers, pension duties and payslip law, and what to ask a payroll accountant before you hand it over.

Figures and rules were checked against GOV.UK on 13 October 2026. This is general information, not tax or legal advice, and your own contracts and circumstances decide what applies.

When do you have to register as an employer?

You must register for PAYE if any employee is paid £96 or more a week, gets expenses or benefits, is receiving a pension, has had another job, or has received certain state benefits (PAYE for employers). Registering is the step that gives you the PAYE reference HMRC uses to match every payment you report. A company director who draws a salary counts as an employee for this purpose, so a one-person limited company often runs a payroll too. The limited company accounts service usually bundles it.

You then choose between running payroll in software yourself or handing it to an accountant or bureau. HMRC's guidance sets out those same choices and notes that you report payments and deductions on or before each payday if you run it yourself.

What are FPS and EPS, and when are they due?

Two electronic reports make up the monthly cycle. The Full Payment Submission, or FPS, lists what each employee was paid and what was deducted. It must reach HMRC on or before payday, even if you pay HMRC quarterly. The Employer Payment Summary, or EPS, is the second report. You send it by the 19th of the tax month after your FPS to claim reductions from what you owe, such as statutory pay recovered (reporting to HMRC).

Enter your usual payday on the FPS even when you paid early or late. Reporting too far ahead of payday means a corrected FPS if anything changes, so most payroll software sends it on the day. If a pay run is missed, call it out to your accountant at once: the report is the evidence HMRC uses to chase your account, and a gap leaves your employees' tax records looking incomplete.

What are the National Insurance thresholds for 2026 to 2027?

Four thresholds matter on a payslip, and each applies to a different party. The primary threshold is where employee National Insurance starts. The secondary threshold is where the employer begins to pay. The lower earnings limit protects an employee's State Pension record, and the upper earnings limit is where the employee rate changes. All figures below are from HMRC's 2026 to 2027 rates page (rates and thresholds for employers).

The gap between the secondary threshold and the primary threshold is real money to an employer. An employee on £30,000 a year has about £25,000 of earnings above the £5,000 secondary threshold, so the employer's NIC at 15% comes to roughly £3,750 before any allowance, whereas the employee pays nothing until £12,570. Pension contributions and the shape of pay (salary versus other forms) change the arithmetic, so ask your accountant to model the real figures.

What is the Employment Allowance?

The Employment Allowance lets eligible employers reduce their employer National Insurance bill by up to £10,500 in 2026 to 2027. It is claimed through your payroll software or your accountant, and the claim shows on the EPS. Not every employer qualifies, and the conditions are set out in HMRC's guidance, so check eligibility before you assume the saving. A business with several employees on modest wages may find that the allowance covers most or all of its employer NIC.

Student loan and postgraduate loan deductions also flow through payroll. HMRC's 2026 to 2027 page gives 9% above the plan threshold for student loans and 6% above £21,000 for postgraduate loans, with Plan 2 starting at £29,385 a year. The deduction is calculated for you by software, but you need the right plan type from the employee's starter details.

What are an employer's automatic enrolment duties?

Automatic enrolment means putting eligible staff into a workplace pension and paying an employer contribution. Your duties start as soon as your first member of staff starts working for you. You must enrol and contribute for staff aged between 22 and State Pension age who earn at least £10,000 a year and normally work in the UK. If someone becomes eligible because of a change in age or earnings, you must enrol them and write to them within 6 weeks of the day they meet the criteria (workplace pensions for employers).

The Pensions Regulator oversees employers under the Pensions Act 2008 and says every employer with at least one employee has legal duties. It expects you to declare your compliance on its online declaration service and to keep meeting your ongoing duties, including re-enrolment (The Pensions Regulator). It publishes warnings, notices and fines for those who do not. Minimum contribution percentages and the earnings band they apply to are set out on GOV.UK and with the Regulator, and they can change, so take them from there at the time you set up a scheme and not from a copied figure.

What does the law say about payslips?

Employees and workers are entitled to a payslip on or before payday. It must show earnings before and after deductions, any deductions that change each time such as tax and National Insurance, and hours worked if pay varies with time. Fixed deductions, for example a season ticket loan repayment, can be explained on the payslip or in a separate written statement sent before the first payslip and updated every year. Printed or electronic payslips are both allowed (payslips). The duty does not extend to genuine contractors or freelancers.

What should you ask a payroll accountant before hiring them?

• Do you file the FPS on payday, and what happens if my information reaches you late?
• Who submits the EPS and claims the Employment Allowance, and do you check that I qualify?
• Who sets up and monitors automatic enrolment, and who makes the declaration to the Pensions Regulator?
• Is the fee per pay run, per employee or a flat monthly sum, and does it include year-end and starter and leaver forms?
• How do payslips reach my staff, and can they see them online?
• What do you do if HMRC raises a query or issues a penalty on my PAYE account?

Payroll fees vary with headcount, how often you pay and how many changes occur each month, so ask for a written fixed quote that states what is and is not covered. Employers who also register for VAT can pair payroll with VAT returns and monthly bookkeeping, which keeps the figures in one place.

How do you check an accountant is properly registered?

1. Ask which professional body they belong to: ICAEW, ACCA, CIMA, AAT, ATT or CIOT.
2. Look up their name and firm in that body's public register and match the address.
3. Confirm the membership is current and read any disciplinary notes the register shows.
4. Ask for their professional indemnity insurance details and a written engagement letter.
5. Agree in writing exactly which payroll tasks they carry out and which stay with you.

Firms are matched to the relevant register before they are listed here, and your enquiry goes to the one firm you pick. You can find an accountant by city or browse the guides. Anyone weighing up whether to employ through a company or work alone can start with the sole trader or limited company guide.