Payroll for small employers and director-only companies
An employer reports every payment to HMRC as it is made, pays over the tax and National Insurance by fixed dates and has duties to staff on pensions and pay. We run the payroll cycle and keep the employer records in order.
Registering as an employer
A business registers with HMRC as an employer before its first payday, and no more than two months before it starts paying anyone. That includes a limited company whose only employee is its sole director. Registration gives the business the employer PAYE reference it needs to run a payroll.
Reporting through RTI
PAYE runs on Real Time Information (RTI). Each pay run is reported to HMRC as it happens:
- Full Payment Submission (FPS). This is sent on or before payday for every pay run, showing what each employee was paid and what was deducted.
- Employer Payment Summary (EPS). This is sent by the 19th of the following tax month (tax months start on the 6th) to claim the Employment Allowance, recover statutory payments or tell HMRC that no employees were paid.
Paying PAYE and National Insurance
The PAYE tax and employee National Insurance deducted in each tax month, together with the employer’s own National Insurance, are paid to HMRC by the 22nd of the following month, or the 19th if paying by post. An employer that usually pays HMRC less than £1,500 a month may be able to pay quarterly instead, by the 22nd after each quarter ends. Quarterly payers still send an FPS for every pay run.
Payslips, starters and leavers
Employees and workers must receive a payslip on or before payday. It shows pay before and after deductions and the amount of each deduction that can vary. Where pay depends on hours worked, it also shows the hours.
A new employee gives you their P45 from their last job, or completes HMRC’s starter checklist, so that the right tax code is used from the first payday. When someone leaves, their final FPS shows the leaving date and they receive a P45.
Year-end: P60, P11D and Class 1A
| What | Deadline |
|---|---|
| Final FPS of the tax year | On or before the last payday |
| P60 to each employee working for you on 5 April | 31 May |
| P11D and P11D(b), reporting expenses and benefits | 6 July |
| Pay Class 1A National Insurance on benefits | 22 July (19 July by cheque) |
Employer rates and allowances for 2026-27
These figures apply to the 2026-27 tax year (6 April 2026 to 5 April 2027):
| Item | 2026-27 |
|---|---|
| Employer Class 1 National Insurance | 15% above the secondary threshold |
| Secondary threshold | £5,000 a year (£96 a week, £417 a month) |
| Upper secondary threshold for under-21s and apprentices under 25 | £50,270 a year |
| Class 1A National Insurance on benefits | 15% |
| Employment Allowance | Up to £10,500 |
The Employment Allowance is claimed through the EPS. A company cannot claim it where its only director is also the only employee paid above the secondary threshold. HMRC publishes the full list of employer rates and thresholds for 2026-27.
Director-only payrolls
A company that pays only its director still runs a payroll and files an FPS for each payment. There are three points to know:
- National Insurance. A director’s National Insurance is normally worked out over an annual earnings period, not pay period by pay period.
- Employment Allowance. It is not available where the director is the only employee paid above the secondary threshold.
- Pensions. Automatic enrolment duties do not usually arise until the company employs someone other than its director. If The Pensions Regulator writes to the company, it still needs a reply.
The balance between salary and dividends is a tax planning question, and it affects the Corporation Tax computation too.
Workplace pensions: automatic enrolment and re-enrolment
An employer’s pension duties begin on the day its first member of staff starts work. Staff aged between 22 and State Pension age who earn at least £10,000 a year and normally work in the UK must be put into a qualifying scheme, with the employer contributing. If someone becomes eligible later, through a birthday or a pay rise, they must be told in writing within six weeks.
The employer completes a declaration of compliance with The Pensions Regulator within five months of its duties start date. Every three years after that, it re-enrols certain staff who have left the scheme and files a re-declaration, again within five months of the third anniversary.
Statutory payments
Payroll also handles statutory sick pay and statutory maternity, paternity, adoption and shared parental pay. For 2026-27, statutory sick pay is £123.25 a week or 80% of the employee’s average weekly earnings, whichever is lower. Statutory maternity pay is 90% of average weekly earnings for the first six weeks, then £194.32 a week or 90% if lower. Amounts recoverable from HMRC are claimed through the EPS.
Minimum wage rates from 1 April 2026
| Age or status | Hourly rate from 1 April 2026 |
|---|---|
| 21 and over (National Living Wage) | £12.71 |
| 18 to 20 | £10.85 |
| Under 18 | £8.00 |
| Apprentice (under 19, or in the first year) | £8.00 |
GOV.UK publishes the current minimum wage rates.
Scheduled change: payrolling benefits
From 6 April 2027, HMRC plans to require company cars, car fuel, vans, van fuel and employer-provided medical benefits to be reported and taxed through payroll rather than on a P11D. Most other benefits follow from April 2028. Loans and accommodation stay on year-end reporting until they are brought in later. Where you provide these benefits, the payroll will need setting up for them before April 2027.
What we do
- Register the business as an employer and set up the payroll.
- Process each pay run, send the FPS and EPS, and issue payslips.
- Tell you what to pay HMRC and the pension provider, and when.
- Handle starters, leavers, tax code notices and statutory payments.
- Prepare P60s, P11Ds and the P11D(b), and post the payroll journals to your bookkeeping.
- Keep the pension declarations and re-enrolment on track.
If HMRC opens an employer compliance check, Linx Tax Defence handles PAYE investigations.
What we need from you
- Hours, overtime, bonuses and any pay changes before each pay date.
- Details of new starters, including their P45 or starter checklist, and of anyone leaving.
- Sickness and family leave dates.
- Details of benefits such as company cars or medical insurance.
- Your pension provider’s details and HMRC correspondence.
Common questions
I am the only director of my company. Do I need a payroll?
If the company pays you a salary, yes. HMRC requires the company to register as an employer even when the only person it pays is its sole director, and each payment is then reported through RTI. If the company pays no salary at all, there is nothing to report. How much salary to take, alongside dividends, is a planning question we can look at with you.
Can my company claim the Employment Allowance?
An eligible employer can claim up to £10,500 off their employer National Insurance for 2026-27, through the Employment Payment Summary. A company cannot claim where its only director is also the only employee paid above the secondary threshold. Only one company in a group of connected companies can claim, and some employers, such as those doing more than half their work in the public sector, are excluded.
When do employees need their P60?
Every employee working for you on the last day of the tax year, 5 April, must receive a P60 by 31 May. It shows their pay and the tax and National Insurance deducted for the whole year. Employees who left during the year do not get a P60; they will already have had a P45 when they left.
Do company directors have to be auto-enrolled into a pension?
A company whose only staff are directors without employment contracts has no automatic enrolment duties. The same applies to a company with a single director and no other staff, even if that director has a contract. Duties start once the company takes on someone else under a contract, or where two or more directors have employment contracts.
What is re-enrolment?
Every three years, an employer must put back into its pension scheme certain staff who have left it or opted out, then complete a re-declaration of compliance with The Pensions Regulator. The re-declaration is due within five months of the third anniversary of the employer's original duties start date. It is needed even if there is nobody to re-enrol.
Will we have to payroll company cars from April 2027?
HMRC's published position is that from 6 April 2027, company cars, car fuel, vans, van fuel and employer-provided medical benefits are to be reported and taxed through payroll. Most other benefits follow from April 2028. Employer-provided loans and accommodation stay on the existing year-end reporting until they are brought in later. Detailed rules are still to be set in secondary legislation.
Related
Bookkeeping
Bookkeeping kept current through the year, reconciled to the bank and ready for VAT, Making Tax Digital and the year end.
Corporation Tax
Corporation Tax computations and CT600 returns for limited companies, prepared from the year-end accounts and filed in iXBRL.
Tax planning
A review of the allowances and reliefs that apply to your income, property or company, carried out before the deadlines that matter.
Talk to us about what you need
Tell us what you have to do and by when. We will explain what is involved and send you a fixed-fee quote, agreed in writing before any work starts.