Payroll for one employee: UK duties, options and costs

1. Register as an employer

• ✓ You normally need to register as an employer with HMRC when you start employing staff, even if the only person you employ is yourself, for example as the only director of a limited company.
• ✓ When it is a must. GOV.UK says you must register for PAYE if, in the current tax year, your employee is paid £96 or more a week, gets expenses and company benefits, is getting a pension, has had another job, or has received Jobseeker's Allowance, Employment and Support Allowance or Incapacity Benefit. If you do not need to register, you'll still need to keep payroll records.
• ✓ Timing. Register before the first payday, but not more than 2 months before you start paying people. HMRC send your employer PAYE reference in a letter.

2. Report to HMRC every payday (RTI)

• ✓ The FPS. On or before each payday, your payroll software sends HMRC a Full Payment Submission, saying what you paid your employee and what you deducted. Include them even if they get less than £96 a week.
• ✓ The EPS. In a tax month when you pay nobody, send an Employer Payment Summary instead, by the 19th of the following tax month. An EPS is also how you claim the Employment Allowance, once each tax year. If your company has only one director, they must not be the only employee liable for employer's National Insurance for the company to claim Employment Allowance.
• ✓ Our guide to RTI, the FPS and the EPS goes through both reports.

3. Give a payslip

• ✓ On or before payday. It must show pay before deductions, deductions like tax and National Insurance, pay after deductions, and the number of hours worked if their pay varies with the time they work.
• ✓ Paper or electronic. You can print payslips or send them electronically. More in what must be on a UK payslip.

4. Pay HMRC

• ✓ By the 22nd of the next tax month, or by the 19th if you pay by cheque through the post. The tax month starts on the 6th.
• ✓ Quarterly, if the bill is small. If you expect to pay HMRC less than £1,500 a month, you can arrange to pay quarterly by contacting HMRC's payment enquiry helpline. Payment is then due by the 22nd after the end of the quarter, for example 22 July for the 6 April to 5 July quarter. You still send the FPS on or before every payday.

5. Workplace pension

• ✓ From the first day. The duties start as soon as your first member of staff starts working for you, known as your duties start date.
• ✓ Who you must enrol. Staff aged between 22 and State Pension age who earn at least £10,000 a year and normally work in the UK. The minimum total contribution is 8%, with at least 3% from you.
• ✓ Declaration of compliance. Complete it with The Pensions Regulator no later than five months after your duties start date.

6. The year end

• ✓ Final FPS. Send it on or before the last payday of the tax year, which ends on 5 April.
• ✓ P60 by 31 May, if your employee is working for you on 5 April. It summarises their total pay and deductions for the year.
• ✓ Expenses and benefits by 6 July, if you provide any.
• ✓ Keep the records for 3 years from the end of the tax year they relate to. More in our payroll year-end guide.

Run it yourself

• ✓ You need payroll software. HMRC's Basic PAYE Tools is free payroll software for businesses with fewer than 10 employees. It works out the tax and National Insurance and sends the information to HMRC.
• ✓ Before you start. You must be registered with HMRC as an employer and have a login for PAYE Online before you can use it. HMRC say it has some limitations, and other payroll software is available.
• ✓ Payslips. If your software cannot produce payslips, you can use different software for them.
• ✓ Weighing it up? Read DIY payroll versus outsourcing and what in-house payroll really costs.

Use a payroll bureau or agent

• ✓ They file for you. An agent or payroll bureau can file online on your behalf, using HMRC's PAYE for Agents online service.
• ✓ That is our service. We run the payroll and track every deadline, for the fixed fees below.

If your company is based outside the UK

With no UK presence, the route is usually one of HMRC's direct schemes rather than an ordinary payroll.

• ✓ A DPNI, in the employee's name. HMRC's DPNI guidance includes employees of an overseas employer that has no UK address it pays wages from. The employee sets up a DPNI and pays both their income tax and their employee National Insurance to HMRC under one PAYE reference. DPNI explained.
• ✓ An NI-only scheme, in your company's name. When someone works in the UK for an employer based in the EU and UK National Insurance is due, it is due on both sides, the employee's and the employer's, so the scheme is an NI-only scheme in the employer's name and not a DPNI or DCNI. An NI-only scheme deals with National Insurance only, not income tax. NI-only explained.
• ✓ Employer's National Insurance, for other European employers. An employer based in the EU, Gibraltar, the Isle of Man, Switzerland, Norway, Iceland or Liechtenstein can owe it as well, when the employee works in the UK and UK National Insurance is due.
• ✓ Your own UK PAYE. A company with no UK presence doesn't have to run UK PAYE, but it can choose to run it in its own name. Then the company takes the employee's income tax off their pay through its own payroll, and our fees are the company's cost, not the employee's.
• ✓ A UK client in the picture. If the employee works for a UK business, such as a UK client, that business may have to run PAYE instead.

We'll ask HMRC for the scheme that fits your facts, and once they have the full facts they may suggest a different one. The route finder names the likely scheme in four questions.