Registering as an employer with HMRC costs nothing, and it can be done online in a single session at gov.uk [1]. Yet the timing is unforgiving: an employer must register before the first payday and cannot register more than two months in advance, and the PAYE reference number that registration produces can take up to 15 working days to arrive [1]. Miss the window and the first payrun runs late.
Around 1.4 million UK private sector businesses employ staff, and every one of them had to complete this free registration before it could pay anyone through PAYE [2]. The process is straightforward once the sequence is clear, but small errors, registering too early, missing the director's National Insurance number, or leaving the activation code too long, cause avoidable delays.
This guide walks through the whole process step by step. It sets out who must register, exactly what details HMRC asks for, how to complete the online registration, what happens after submission, and the free software options available once the PAYE scheme is live. It is written for the first-time employer who wants to get registered correctly and at no cost.
Key takeaways
- Registering for PAYE with HMRC is free and is done online through the gov.uk employer registration service [1].
- An employer must register before the first payday and no more than two months before paying staff [1].
- Most limited companies can register online and need the National Insurance number of at least one director [3].
- HMRC sends an activation code for PAYE Online within 10 days, and it must be used within 28 days [4].
- HMRC's Basic PAYE Tools is free but limited to fewer than 10 employees and does not handle automatic enrolment [5].
- Registration is free, but running payroll afterwards still requires HMRC-recognised software to file Real Time Information.
Who has to register for PAYE
A business must register as an employer with HMRC when it starts employing staff, or when it uses subcontractors for construction work [1]. The obligation is triggered by the act of employing, and it applies even where the only person paid is the business owner. A limited company must register even when it employs only its single director [3].
Not every payment situation requires a scheme immediately. If none of the staff earns above the Lower Earnings Limit, and none has another job or receives a pension, a business may not need to register a PAYE scheme, though it must still keep payroll records [3]. The Lower Earnings Limit for the 2026-27 tax year is £129 a week, £559 a month or £6,708 a year [6].
The situations that force registration
Certain circumstances mean PAYE must be operated regardless of the earnings level. Registration is needed if any employee earns at or above the Lower Earnings Limit, already has another job, receives a pension, or gets expenses and benefits [3]. The presence of any one of these is enough to require a scheme, so a business paying even a modest wage to someone who has a second job must register.
Construction is a special case. A business using subcontractors for construction work must register under the Construction Industry Scheme as well, which sits alongside PAYE [1]. For most other small businesses, the standard PAYE registration is the only step required to become an employer in HMRC's records.
What details are needed to register
Registration is quick when the right information is to hand before starting. HMRC asks for the business details and the details of at least one director or owner. For a limited company, the key personal item is the National Insurance number of at least one company director [3]. Gathering the details in advance avoids abandoning a part-completed form.
The table below sets out what a typical small business needs before beginning the online registration.
| Item | Why HMRC needs it |
|---|---|
| Business name and trading address | To create the employer record |
| Business structure (limited company, sole trader, partnership) | To route the correct registration path |
| Company registration number (limited companies) | To match Companies House records |
| National Insurance number of a director or owner | To identify the responsible person [[3]](https://www.gov.uk/paye-for-employers) |
| Confirmed date of first payday | To set the scheme start and check the two-month rule [[1]](https://www.gov.uk/register-employer) |
| Contact email address | To manage the Government Gateway account [[7]](https://www.gov.uk/log-in-register-hmrc-online-services) |
A business also needs a Government Gateway user ID to complete the process. If it does not already have one, it can create it as part of signing in to HMRC online services, at no cost [7]. The same credentials then give access to the wider suite of HMRC online tools.
Step by step: registering online for free
The registration itself follows a clear sequence. Working through it in order is the surest way to avoid a rejected or delayed application.
Step 1: check the timing
Do not register until the business has a confirmed start date for its first member of staff. The earliest an employer can register is two months before it starts paying people, and it must register before the first payday [1]. Registering too early is a common reason for an application being turned away, so the confirmed payday date should be settled first.
Step 2: sign in to HMRC online services
Registration is completed through the gov.uk employer registration service, which uses a Government Gateway account [1]. A business signs in with its existing user ID, or sets one up during the process [7]. Most limited companies can complete the whole registration online without contacting HMRC by phone or post [3].
Step 3: complete the employer registration
The form asks for the business and director details gathered earlier. When the business submits it, HMRC begins setting up the employer record. Registration produces two references that appear on nearly all PAYE correspondence: an employer PAYE reference and an Accounts Office reference, both of which are needed to run payroll and pay HMRC [8]. These should be stored somewhere durable as soon as they arrive.
Step 4: activate PAYE Online
An employer registering online is automatically enrolled for PAYE Online [4]. HMRC then posts an activation code, usually within 10 days, and the account must be activated within 28 days of the date on the letter [5]. Leaving it beyond 28 days means the code expires and a replacement has to be requested, which adds delay. PAYE Online is the portal where the business views what it owes, sends certain reports and manages the scheme.
What happens after registration
Once the scheme is live, the business receives its employer PAYE reference number, which is the identifier it needs to set up payroll [1]. From this point the free registration has done its job, and the ongoing obligation shifts to running the payroll itself: calculating deductions and reporting to HMRC on or before every payday [9].
Before the first payrun, the business also needs each new employee's details. HMRC's new-employee guidance sets out the checks, including confirming the person should be paid through PAYE and obtaining a P45 or completing a starter checklist to set the tax code [10]. The starter checklist is a free HMRC form and determines the code used when no P45 is available [11]. Businesses hiring for the first time can follow this fuller walkthrough of hiring a first employee alongside registration.
Paying an employee before the reference arrives
Occasionally a payday falls before the PAYE reference number has arrived. HMRC allows for this. The employer should run the payroll, store the Full Payment Submission, and send it as a late submission once the reference is received [3]. This keeps the employee paid on time without breaching the reporting rules, provided the delayed submission follows promptly.
Common registration problems and how to avoid them
A few issues account for most registration delays. Registering too early is the most frequent: because the earliest permitted point is two months before the first payday, an application submitted before then can be rejected [1]. Confirming the payday date first, and only then registering, avoids this entirely. A missing director National Insurance number is the second common snag, since the online form cannot be completed without it [3].
HMRC's registration service can occasionally be unavailable for maintenance, and the government publishes a service-availability page that flags planned downtime and known issues [13]. Checking it before starting saves time if the service happens to be down. Finally, a business unsure whether a particular worker needs to be paid through PAYE at all can run HMRC's own check, which walks through the earnings and circumstances that trigger the requirement [14]. The employer further guide to PAYE also sets out the registration and reporting duties in full for the 2026-27 tax year [15].
Free and low-cost software after registering
Registration is free, but Real Time Information has to be filed with software HMRC recognises, and here a business has a genuinely free option [12]. HMRC's own Basic PAYE Tools is free payroll software for businesses with fewer than 10 employees [5]. It calculates tax, National Insurance and student loan deductions and files the required reports.
The free tool has real limits, and knowing them prevents an unwelcome surprise later. Basic PAYE Tools supports details for up to nine employees, is not designed for agents or bookkeepers, and does not work out who to automatically enrol or calculate pension contributions [5]. Because automatic enrolment is a legal duty for every employer, a business relying on the free tool has to handle the pension assessment separately. The table below compares the free tool with recognised commercial software.
| Feature | Basic PAYE Tools (free) | Recognised commercial software |
|---|---|---|
| Cost | Free | Per employee or per payslip |
| Employee limit | Fewer than 10 | No practical limit |
| Files RTI to HMRC | Yes | Yes |
| Automatic enrolment assessment | No | Usually yes |
| Payslip production | No | Yes |
For a business that outgrows the free tool, or one that needs payslips and pension assessment from the start, recognised payroll software for small businesses fills the gap while keeping the compliance filing automatic. Software that holds the HMRC Recognised badge submits the Full Payment Submission and Employer Payment Summary directly and applies the current rates without manual reconfiguration, which is the baseline test for any payroll product. A one-person business or occasional employer that only needs a compliant payslip can use an instant payslip generator rather than a full scheme, while micro-employers running regular payroll often choose dedicated sole-trader payroll. Software platforms that need to embed UK payroll into their own product register their customers and run the same filings through an HMRC-recognised payroll API.
Conclusion
Registering for PAYE is one of the few genuinely free and self-service steps in becoming a UK employer, and it rewards a little preparation. Gathering the business and director details in advance, confirming the first payday before starting, and activating the PAYE Online code within 28 days together remove almost every cause of delay. The reference numbers that result are the keys to the whole payroll system, so they should be stored carefully from day one.
Registration is the beginning rather than the end. Once the scheme is live, the recurring duty is to file Real Time Information on or before every payday and to meet the automatic enrolment obligation, and the software a business chooses shapes how much of that work is automated. The free tool covers the smallest employers, but any business expecting to grow, produce payslips or assess a pension is better served choosing recognised software early, so the step up does not interrupt a payrun later.
Frequently asked questions
Is registering for PAYE with HMRC actually free?
Yes. Registering as an employer is done through the gov.uk employer registration service at no cost, and most limited companies can complete it entirely online [1]. There is no registration fee at any stage. The only ongoing cost is the payroll software used to file Real Time Information afterwards, and even that has a free option for the smallest employers through HMRC's Basic PAYE Tools [5].
How long does PAYE registration take?
The online form takes a single session to complete, but the employer PAYE reference number can take up to 15 working days to arrive [1]. HMRC also posts an activation code for PAYE Online within around 10 days, which must be used within 28 days [4]. Because of these lead times, a business should register as soon as it has a confirmed first payday, while staying within the two-month advance limit.
What information do I need to register as an employer?
For a limited company, the essentials are the business details, the company registration number, a confirmed first payday, and the National Insurance number of at least one director [3]. A Government Gateway user ID is also needed, which can be created for free during the process [7]. Having these to hand before starting means the registration can be finished in one sitting.
Can I run payroll for free after registering?
For the smallest employers, yes. HMRC's Basic PAYE Tools is free payroll software for businesses with fewer than 10 employees and files the required reports to HMRC [5]. It does not produce payslips or assess automatic enrolment, so a business needing either of those, or expecting to grow beyond nine employees, will need recognised commercial software instead [12].
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