How to Pay a New Employee for the First Time: The UK Employer Checklist

The job offer has been accepted. The start date is set. The employment contract is signed. And then, somewhere between the welcome email and the first payday, the question surfaces: what exactly needs to happen before the money goes in the account?

More than most employers expect. Less than they fear. But in a specific order, on a specific timeline, without skipping the steps that look optional but aren't.

Before paying a new employee for the first time, you need to be registered for PAYE, have a completed starter declaration or P45 from the employee, have applied the correct tax code, have assessed them for auto-enrolment, and be ready to submit an RTI Full Payment Submission on or before the first payday. Not after. On or before.

This is the sequence.

Step One: Register for PAYE Before You Need It

PAYE registration through HMRC must be completed before the first salary payment. It cannot be done retrospectively. If the employee starts on the 1st of the month and you register on the 3rd, you have already missed the deadline for the first FPS.

Registration is through HMRC's online employer registration service. It takes ten to fifteen minutes. HMRC issues two reference numbers: a PAYE reference (format: three numbers, a slash, and a number-letter sequence) and an Accounts Office reference (used for PAYE payments). Both are needed to use the payroll software.

Allow up to five working days for HMRC to confirm registration and issue the references. For a first employee starting on a Monday, the Friday before is already cutting it fine.

If you already have a PAYE scheme from previous employees, you do not need to re-register. You add the new employee to the existing scheme.

Step Two: P45 or Starter Declaration

On the first day, or as close to it as possible, get one of two things from the new employee.

P45 — issued by their previous employer. It shows their tax code, their earnings to date in the current tax year, and the Income Tax paid. The payroll uses this to set the cumulative position correctly. Hand it to whoever runs the payroll. Don't file it and forget it — the information needs to go into the payroll software.

Starter declaration form — used when there is no P45 (first job, gap between employments, lost the form). Three statements, the employee ticks one. The answer determines the starting tax code. The form should be completed before the first pay run, not after. If the deadline is tight, a verbal answer recorded and the form completed formally at the earliest opportunity is better than running the payroll without any information.

If neither is available and the employee hasn't completed the starter declaration, the default is emergency tax — 1257L on a week 1 / month 1 basis. The employee will likely be over-taxed. The correction is administrative and recoverable, but it creates friction with a new hire in their first month of employment. Not ideal.

Step Three: Auto-Enrolment Assessment

On day one, assess the new employee against the auto-enrolment criteria.

The questions are straightforward: Are they aged between 22 and state pension age? Do they earn above £10,000 per year (£833 per month, £192 per week)?

If yes to both: they are an eligible jobholder and must be automatically enrolled into a qualifying workplace pension within six weeks of the employment start date. They can opt out after enrolment — but enrolment must happen first.

If they are below 22, or between state pension age and 74, or earn below £10,000: they are a non-eligible jobholder or entitled worker. They are not automatically enrolled but have the right to opt in. The employer must inform them of their rights in writing within six weeks.

Missing the auto-enrolment window generates a compliance notice from The Pensions Regulator, followed by a fixed penalty, followed by an escalating daily penalty if enrolment still hasn't happened. TPR's compliance team actively monitors this. They identify failures systematically.

Step Four: Bank Details and Payroll Setup

Add the employee to the payroll software with: full name (must match HMRC records exactly), date of birth, National Insurance number, home address, start date, pay rate, pay frequency, and tax code from the P45 or starter declaration.

National Insurance number is mandatory. Running payroll without one generates an RTI submission error and HMRC cannot match the employee to their tax account. If the NI number isn't available on day one — new workers, young employees getting their first NI number — the submission can run without it temporarily, but it must be added at the earliest opportunity and the submission corrected.

Bank details need to be verified before the first pay date. BACS transfers return errors for invalid sort codes or account numbers. The employee doesn't get paid. This happens regularly. The fix is to ask for the details in writing, ideally with a bank statement or screenshot, before the first payday.

Step Five: The RTI Submission — On or Before Payday

On the date the salary is paid — or before — the Full Payment Submission goes to HMRC. It reports the employee's details, their pay, their deductions, and the year-to-date position.

Not after. Not on the same day by end of business. On or before. If the salary is paid at midnight via an automated BACS run, the FPS must be with HMRC before midnight. In practice, most payroll software submits the FPS when the pay run is finalised, which is typically the day before the payment date. That timing is fine. The day after is not.

Late FPS submissions accumulate into late filing penalties. For a small employer — one to nine employees — the penalty is £100 per month of late filing. It doesn't announce itself. It arrives in a penalty notice.

What Happens After the First Pay

Following the first successful payment and FPS submission: enrol the employee in the pension scheme if required, issue a payslip (legally required from the first payment for all employees), and file the auto-enrolment communication letter within six weeks.

At year end, the employee receives a P60 by 31 May. If they leave during the year, they receive a P45 at the point of leaving. These are not optional. They are statutory obligations.

bookd. manages new starter onboarding as part of the payroll service — collecting the right information, applying the right code, assessing for auto-enrolment, and submitting the FPS before the first payday. The first month of employment is when most payroll errors begin. Getting it right once means not correcting it for the rest of the year.