How to Register as an Employer and Run Payroll (UK)
The step-by-step way to register as an employer with HMRC and run PAYE for a home worker in the UK.
Quick answer: register as an employer with HMRC before the first payday, set up PAYE, and each payday deduct income tax and employee National Insurance, pay employer NI above the threshold, and report in real time (RTI). Most families use a household/nanny payroll service to handle it.
Becoming an employer sounds daunting, but it's a well-trodden path. Here's how it works.
Register with HMRC
Before your employee's first payday, register as an employer and get a PAYE reference. You can do this yourself online or let a payroll service register on your behalf.
Run payroll each payday
- Work out gross pay (at least £12.71/h, 21+, from April 2026).
- Deduct income tax and employee NI via your employee's tax code.
- Pay employer NI above the secondary threshold.
- Send an RTI report to HMRC and give a payslip.
Pension and insurance
Assess for automatic enrolment (aged 22 to State Pension age and earning over £10,000/year) and set up a workplace pension if eligible. Arrange employer's liability insurance.
Why gross, not net
Agree the wage in gross. Net deals shift the cost of tax-code changes onto you and can rise unexpectedly. See the pay guide.
Official sources
Conclusion
Register, run PAYE each payday, and handle pension and insurance. A payroll service takes the admin off your plate for a modest monthly fee.
See also
- Hiring legally — the full framework.
- How much it costs — employer NI and pension included.
FAQ
Can I just pay cash?
No — paying above the thresholds without operating PAYE is undeclared employment. It leaves the worker without rights and exposes you to HMRC penalties.
Is a payroll service worth it?
For most households, yes: for a small annual fee it handles HMRC registration, payslips, tax/NI calculations and pension duties, which removes the paperwork and the risk of errors.