Registering a UK PAYE scheme for a new subsidiary
The company is incorporated, the first hire has signed and there's a payday in the diary. Before that person can be paid through payroll, the subsidiary has to be registered with HMRC as an employer. The form itself won't take long. What catches overseas groups out is the wait for the post afterwards, and not knowing what to do if payday gets there first.
The short version. Register no earlier than 2 months before the first payday. HMRC post you two references, and you use them to enrol for PAYE Online. If payday comes before the letter, run the payroll and pay your employee anyway, keep the Full Payment Submission, and send it once the reference arrives with late reporting reason code G.
When the window opens
GOV.UK puts it in two sentences. You must register before the first payday, and you can't register more than 2 months before you start paying people. So for a first payday at the end of November, the earliest you can register is the end of September.
One wrinkle. If the subsidiary will give the new hire expenses or benefits before their first payday, HMRC want that earlier date instead.
Online or by phone
Most limited companies can register online, and GOV.UK's online route is for a limited company with 1 to 9 directors. With 10 or more directors you're told to register by phone. Overseas parents sometimes give a subsidiary a full board, so count the directors before you start.
GOV.UK lists what HMRC ask for when you phone. It's a sensible list to have ready whichever route you take.
| HMRC will ask about | What that means for a new subsidiary |
|---|---|
| The company | Name, registered address, phone number, any trading name, the type of business, its company registration number and its unique taxpayer reference (UTR) |
| The directors | Names and National Insurance numbers. A director based abroad may never have had a number. GOV.UK's list allows for directors told by the Department for Work and Pensions that they don't qualify for one, so check where each director stands before you call |
| You, the person registering | Your name, email and phone number, and a postal address for correspondence if it differs from the company's |
| The employees | The first payday (or the first expenses or benefits, if earlier), how many people you expect to employ this tax year, whether you'll use construction subcontractors, and whether you'll run an occupational pension scheme |
What comes back, and in what order
Once you're registered, HMRC send a letter with your PAYE reference and your Accounts Office reference. You need both to report and to pay, and your payroll software needs both before it can send anything.
Then you enrol for PAYE Online, using those two references. That's not the last step either. HMRC post an activation code within 10 days, and you must activate within 28 days of the date on that letter, or you start the enrolment again.
That's two letters by post before payroll can report. If the subsidiary's registered office is an agent's address, think about using the correspondence address line for somewhere a person actually opens the post.
If payday gets there first
It happens, and it isn't a crisis. GOV.UK's instruction for paying an employee before you have the employer PAYE reference is short:
- Run payroll on the usual payday and pay your employee.
- Store the Full Payment Submission your software produces for that run.
- Send it late, as soon as possible after the reference arrives, selecting late reporting reason code G.
Don't leave the reason off. GOV.UK says that if you do, or HMRC disagree with it, they may send a penalty warning and a penalty. Paying the person as a contractor to get round the wait isn't the fix either. It swaps a short delay for a status problem. Our guide to RTI, the FPS and the EPS covers what the submission carries.
The payment still has its usual date
Code G is about the report. The money follows the normal rhythm, with the balance paid by the 22nd of the next tax month, or the 19th if you pay by post. If a payment does go early or late, GOV.UK says to add 4 numbers to the 13-character Accounts Office reference: the last two digits of the tax year the payment is for, then that month's number in the tax year. Payroll for 6 November to 5 December 2026 is month 08 of the year ending in 2027, so the 4 numbers are 2708. HMRC's online payment service works them out for you. Get them wrong and the money may be delayed or put against a different tax bill.
An illustration
A furniture maker in Monterrey sets up a subsidiary in Leicester to run a trade showroom. The subsidiary has four directors, three of them in Mexico. Its first employee, a showroom manager, starts on 2 November and is paid monthly, with the first payday on Friday 27 November 2026.
The subsidiary registers online in the last week of October, after checking each director's position on National Insurance numbers. The letter hasn't come by 27 November, so the payroll runs on the day, the manager is paid, and the Full Payment Submission is saved. The references arrive in early December. The subsidiary enrols for PAYE Online the same day, activates when the code comes, sends the stored submission with code G, and pays HMRC before 22 December.
The wait isn't wasted time, either. Collect the starter's P45 or starter declaration and their bank details, and choose the workplace pension, which our guide to auto-enrolment for overseas employers covers.
Would you rather hand the registration over?
We register UK subsidiaries as employers and run the payroll from the first payday, at fixed published prices.
See the subsidiary payroll optionsCommon questions
How early can a new UK subsidiary register as an employer?
GOV.UK says you must register before the first payday, and you cannot register more than 2 months before you start paying people.
What does HMRC send after you register as an employer?
A letter containing your PAYE reference and your Accounts Office reference. You then enrol for PAYE Online with them. HMRC post an activation code within 10 days, and you must activate within 28 days of the date on that letter.
Can we pay an employee before the PAYE reference arrives?
Yes. GOV.UK says to run payroll, store your Full Payment Submission, and send it late once the reference arrives. It goes as soon as possible after you receive the reference, with late reporting reason code G.
Read next
- Overseas company with a UK subsidiary: your PAYE options
- How long does UK payroll setup take from overseas?
- First UK hire: a founder's payroll checklist
- RTI, FPS and EPS explained
- You have a UK subsidiary. Do you still need a DPNI?
General information for UK subsidiaries of overseas groups, not tax or legal advice. It reflects GOV.UK guidance as published in October 2026, which can change. Please check your own position before acting.