PAYE & Payroll

PAYE (Pay As You Earn) is how UK employers collect income tax and National Insurance from salaries before paying them to staff. Every Ltd company that pays a director or employee a wage runs PAYE. The rules around tax codes, employer NIC, the Employment Allowance, P11D benefits and auto-enrolment pensions change regularly, and the consequences of missing a Real-Time Information submission are real. These guides cover the basics, the most common pitfalls, and the changes that came in with the 2025/26 and 2026/27 Budgets.

6 key facts Annual cycle Reviewed by qualified accountants

Guides

PAYE & Payroll guides — coming soon

We're writing these next. In the meantime, the key facts and resources below should cover most needs.

No guides yet for PAYE & Payroll. In the meantime, the key facts and resources below should cover most needs — or ask an accountant.

Key facts

The headline figures

£12,570

Personal allowance

Tax-free for most employees, 2025/26

£5,000

Employer NI threshold (ST)

Employer NI starts above this, 2025/26 (down from £9,100)

15%

Employer NI rate

On earnings above the £5,000 ST, 2025/26 (up from 13.8%)

Employee NI rate

Above the primary threshold (£12,570) up to £50,270

£10,500

Employment Allowance

Reduces employer NI bill for eligible employers, 2025/26

22nd of next month

PAYE payment deadline

By bank transfer (19th if paying by post)

Annual cycle

Key dates and deadlines

The events you can't afford to miss in a typical year.

Each pay day
Run payroll + send FPS to HMRC
Calculate gross-to-net for each employee, send a Full Payment Submission to HMRC on or before pay day.
If no employees were paid in a month
Send an EPS
Employer Payment Summary tells HMRC there's nothing to report — otherwise they'll chase you.
By 22nd of next month
Pay HMRC
Send the PAYE and NI deductions to HMRC by the 22nd (electronic) or 19th (cheque).
End of tax year (5 April)
Issue P60s by 31 May
Every employee on the books at year-end gets a P60 summarising their pay and deductions.
By 6 July
Submit P11Ds
Report any taxable benefits-in-kind provided to employees / directors during the previous tax year.

Useful resources

Official tools and references

Quick answers

PAYE & Payroll FAQs

Do I need to run payroll for my one-person Ltd company?

Yes if you want to pay yourself a salary. Even at a 'low salary' (just up to the NI threshold), you still need to register as an employer with HMRC, run real-time payroll and send FPS submissions each month.

What's the most tax-efficient salary for a director?

Usually the lower of the secondary threshold (£5,000) or primary threshold (£12,570) — figures change each year. Just above £5,000 means you start owing employer NI; staying below means no NI but you might miss out on building qualifying state-pension years. Your accountant will recommend based on your numbers.

How does the Employment Allowance work?

It reduces your employer NI bill by up to £10,500 per year — but it's not available to one-person Ltd companies where the only employee is the sole director. If you have at least one non-director employee, you usually qualify.

What happens if I miss a PAYE payment?

HMRC charges interest immediately and may add a late-payment penalty (1-4% depending on how late). Worse — late RTI submissions can also trigger penalties even if you eventually pay. Speak to HMRC quickly if there's a problem.

Can I employ family members?

Yes, but the salary must be commercially justifiable for the work actually done. HMRC will challenge a £40k 'salary' for a child who does an hour a week — and disallow the company's deduction. Document the role and pay a market rate.

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