Do You Need to Register as an Employer in 2025/26?
Hiring your first employee is a major milestone — but even before you’ve handed out the first payslip, you may need to register as an employer with HMRC.
And it’s not just about staff. If you’re a company director, pay yourself a salary, or even reimburse expenses, you might already have triggered the need to register — even if no one else works for your business.
In this guide, we break down exactly when you need to register as an employer, what PAYE involves in 2025/26, and how it applies to directors, freelancers, family businesses, and companies paying under the tax thresholds.
What does “registering as an employer” mean?
Registering as an employer means telling HMRC that your business is going to:
- Pay employees a salary or wage
- Operate PAYE (Pay As You Earn) to deduct tax and National Insurance
- Submit regular payroll reports (RTI submissions)
- Pay employer’s liabilities (e.g. NIC, student loans, etc.)
You’ll get a PAYE reference number and be required to run a monthly or weekly payroll using recognised payroll software.
You must register before the first payday — but not more than 2 months in advance.
Do all employers need to register?
No — not in every case. If you only pay staff (or directors) below certain thresholds, you may not need to register.
For the 2025/26 tax year, the key PAYE thresholds are:
- £123 per week (or £533 per month, or £6,396 per year) = Lower Earnings Limit (LEL)
→ Earn above this and you qualify for NIC credits - £242 per week (or £1,048 per month, or £12,570 per year) = Primary Threshold
→ Above this, employee National Insurance is due - £175 per week (or £758 per month, or £9,100 per year) = Secondary Threshold
→ Above this, employer NIC may apply (unless covered by Employment Allowance)
If you pay:
- Above the LEL → you must keep records and may need to run a payroll
- Above the NIC thresholds → you must register and report via PAYE
Even if no tax is due, registration is still required in many cases — especially for company directors.
Situations where you must register
Here are some common examples where employer registration is required, even for small or one-person businesses:
1. You’re a limited company director paying yourself a salary
Even if you’re the only person on payroll, if your salary is:
-
Above £123/week (LEL)
-
And you’re reporting it for NIC credits or Corporation Tax deductions
… you’ll need to run payroll and register as an employer. This is true even if no tax or NIC is payable (e.g. £9,100 salary setups).
2. You hire a freelancer or part-time helper
If you bring someone on board — even casually — and:
- You control when/how they work
- They are not clearly self-employed
- You pay above the PAYE threshold
… then HMRC is likely to treat them as an employee, and you’ll need to operate PAYE. That includes:
- Family members
- Students or part-time staff
- Long-term casual workers
We recommend checking status carefully — penalties apply for getting this wrong.
3. You pay a nanny, carer, or domestic staff
If you employ someone to work in your home (e.g. a nanny or housekeeper), and pay above the threshold, you must register as an employer and run PAYE.
This often catches people out, as the employment is private — but still subject to tax and NI law.
4. You offer taxable benefits (e.g. company car, private health insurance)
Even if the salary is below PAYE limits, offering benefits in kind triggers P11D reporting and often requires payroll setup — especially for directors or employees with access to:
- Company cars
- Private medical insurance
- Mobile phones
- Director’s loans
- Living accommodation
Situations where you may not need to register (but should still be careful)
There are a few cases where registration isn’t strictly required, but we often recommend it anyway for compliance or efficiency.
1. You reimburse expenses only
If you repay staff or directors for actual business costs (e.g. travel or stationery), and no salary or benefits are provided, you may not need to register — as long as:
- The payments match actual costs
- No personal benefit is involved
- Records and receipts are kept
But if you start paying flat-rate allowances or giving “extra” money without receipts, HMRC may see it as salary in disguise.
2. You only pay dividends, not salary
If you’re a company director not drawing a salary, and only paying yourself via dividends, you don’t need to register as an employer — but you lose NI credits, and dividends can’t be deducted for Corporation Tax.
We usually recommend a modest salary + dividends strategy, which would require employer registration.
PAYE setup process (2025/26)
If you do need to register, here’s how it works:
-
Tell HMRC you’re becoming an employer at gov.uk/register-employer
-
Get your PAYE reference number (can take 5–10 days)
-
Choose payroll software (Merranti clients typically use TaxCalc Payroll or Xero Payroll)
-
Run Real Time Information (RTI) reports each payday
-
Pay any PAYE and NIC by the 22nd of the following month
Even if no PAYE is due, you must still submit RTI reports showing “nil” payments — or risk HMRC chasing you for late filings.
What if you make a mistake?
HMRC takes payroll compliance seriously — even for small companies.
Common issues that cause problems:
- Missing RTI reports (even if nothing to pay)
- Not registering when paying above the LEL
- Misclassifying someone as self-employed
- Forgetting to report director salaries
- Not declaring benefits or reimbursed expenses
Penalties for late filing, missed registration, or incorrect employment status can be significant — especially if they go unnoticed for several years.
Merranti’s payroll service handles this for clients monthly, making sure everything is compliant and correctly reported — so you don’t need to worry about the small print.
Final thoughts
If you run a business — even a one-person limited company — chances are you’ll need to register as an employer at some point.
From paying yourself a small salary to hiring your first employee or apprentice, it’s essential to know where the thresholds are and when PAYE becomes mandatory.
It’s also one of the most common areas where small business owners unintentionally fall foul of HMRC. But with the right setup and support, it’s entirely manageable — and it can even save you tax when done correctly.
Not sure if you need to register as an employer?
Book a Payroll Setup Review with Merranti and make sure your business stays compliant — right from the first payment.
