- You can legally run your own payroll in the UK once you register as an employer with HMRC and use recognised software that submits RTI.
- Every payday brings non-negotiable duties: a Full Payment Submission on or before payday, workplace pension contributions, and PAYE paid to HMRC by the 22nd of the following month.
- A sole director paying themselves a steady salary is the clearest DIY case, while statutory pay, staff turnover, or a missed RTI submission are the signs to hand it over.
Yes, you can run payroll yourself in the UK. You register as an employer with HMRC, use recognised payroll software to work out pay and deductions, and send a Full Payment Submission on or before every payday.
The catch isn’t the setup. It’s what comes after: payroll in a limited company or any business means real-time reporting every pay run, workplace pension duties, and statutory pay when someone’s off sick or on maternity leave. Get it right and you’ll save a monthly fee. Get an employee’s pay wrong and it’s someone’s rent that’s short.
This guide walks through the whole thing honestly, so you can decide whether to do it or hand it to a payroll run for you.
Can you run your own payroll?
You can run your own payroll in the UK, and plenty of business owners do, especially those paying one or two people. There’s no legal requirement to use an accountant or bureau.
What you do need is to be set up as an employer with HMRC and to use payroll software that HMRC recognises. The software handles the maths and files your reports; you handle the accuracy and the deadlines.
DIY payroll suits you best if your setup is simple and steady. A single director on a fixed salary, or a couple of employees paid the same each month, is very manageable. The more people, variable hours, and statutory pay you add, the faster it stops being a quiet ten minutes a month.
Step 1: Register as an employer with HMRC
Register as an employer before your first payday, and no more than two months before you start paying anyone. You do this online through HMRC’s employer registration service, and there’s no charge.
You need to register once you pay anyone, including yourself as sole director, at or above the secondary threshold of £96 a week (£5,000 a year) for 2026/27. That covers most director salaries and any employee on regular pay.
HMRC then posts you two references you’ll use constantly: an employer PAYE reference and an Accounts Office reference. Allow up to 15 working days for these to arrive, which is exactly why you shouldn’t leave it to the week before payday. For the full walkthrough of registering as an employer, including what to have ready, start there.
If your references haven’t arrived by payday, don’t delay paying anyone. Run payroll on time, work out the correct deductions, and send your first submission late once the references land. HMRC accepts that in this situation.
Step 2: Choose payroll software
Your payroll software is the tool that does the actual work, so choose it before you hire, not after. It calculates gross-to-net pay, works out tax and National Insurance, produces payslips, and files your reports to HMRC.
Four things matter when you pick:
- It must be HMRC-recognised, so it can submit Real Time Information returns.
- It should support auto-enrolment assessment for workplace pensions.
- It needs to generate compliant payslips.
- It should handle statutory pay like sick pay and maternity pay.
Is HMRC’s Basic PAYE Tools enough?
HMRC’s free Basic PAYE Tools is genuinely usable, but it has real limits worth understanding up front. It’s built for employers with fewer than 10 employees, and it doesn’t produce payslips or handle auto-enrolment pension calculations on its own.
So if you have staff who need payslips (which employees are entitled to) or you’re assessing anyone for a workplace pension, you’ll be bolting on extra tools or spreadsheets. For most employers with even one employee beyond themselves, a commercial package like Xero or QuickBooks ends up simpler than stitching the free tool together with workarounds.
Step 3: Add your employees
Set each employee up in your software with their personal details, National Insurance number, and the right tax code before you run their first payroll. The tax code decides how much income tax comes off, so getting it wrong ripples through every pay run.
Where you get the starting information depends on the person:
- If they have a P45 from a previous job in the same tax year, use it for their tax code and pay-to-date figures.
- If they don’t have a P45, they complete HMRC’s starter checklist, which sets a temporary code until HMRC confirms the right one.
- Check whether they’re repaying a student loan, as that’s a separate deduction you’ll need to switch on.
The new starter forms guide covers the P45 and starter checklist in detail, including which code to apply when someone arrives without paperwork.
Enter a new starter's details the moment they accept, not the day before payday. Chasing a National Insurance number or student loan status at the last minute is how first pay runs go wrong.
Step 4: Sort out the workplace pension
Auto-enrolment is a legal duty, not an optional extra, and it starts from your first payday for eligible staff. You must assess every worker, enrol those who qualify, write to all of them, and complete a declaration of compliance with The Pensions Regulator.
For 2026/27, a worker is automatically eligible if they’re aged between 22 and State Pension age and earn over the £10,000 earnings trigger. Contributions are worked out on qualifying earnings, the band between £6,240 and £50,270.
The minimum contribution is 8% of qualifying earnings in total, with at least 3% from you as the employer. The rest comes from the employee, topped up by tax relief.
Do you need a pension for a single director?
A director with no employment contract and no other staff usually sits outside auto-enrolment entirely. That’s one reason a sole director is the easiest payroll to run yourself. Once you take on even one eligible employee, though, the full duties apply, so it’s worth reading up on the employment allowance and pension duties together before your first hire.
Step 5: Run your first payroll
Running payroll means turning each person’s gross pay into net pay by taking off the right deductions, then recording it all. Your software does the calculation, but you’re responsible for feeding it the correct figures.
A single pay run works out:
- Income tax, based on the employee’s tax code.
- Employee National Insurance, deducted from their pay.
- Employer National Insurance, which you pay on top at 15% on earnings above the £5,000 secondary threshold for 2026/27.
- Pension contributions, both the employee’s and yours.
- Any student loan repayments.
What’s left after employee deductions is their net pay, and that’s the figure that lands in their bank account. Your software then produces a payslip, which you must give every employee on or before payday. Remember employer National Insurance is a cost to you, not a deduction from the employee, and the employer National Insurance guide sets out how the Employment Allowance can reduce that bill.
Step 6: Submit RTI to HMRC on or before payday
Real Time Information is the part people forget, and it’s the one HMRC penalises. You must send a Full Payment Submission (FPS) on or before the day you pay your staff, every single pay run, reporting what each person earned and what you deducted.
There’s a second return too. The Employer Payment Summary (EPS) is filed by the 19th of the following month when you need to reclaim statutory payments, claim the Employment Allowance, or tell HMRC you ran no payroll that month.
What happens if you file RTI late?
Miss the FPS deadline and HMRC charges a monthly penalty based on your headcount: £100 for 1 to 9 employees, £200 for 10 to 49, £300 for 50 to 249, and £400 for 250 or more. You get one unpenalised default per tax year, and there’s an informal three-day grace period, but persistent lateness stacks up fast. This is the single strongest argument for taking payroll seriously, because a late filing is entirely avoidable and entirely your responsibility.
Step 7: Pay HMRC what you owe
After you’ve filed the FPS, you owe HMRC the tax and National Insurance you collected, and payment is due by set dates. Pay electronically by the 22nd of the following tax month, or by the 19th if you pay by post.
The bill combines the income tax you deducted, employee National Insurance, and your employer National Insurance, minus anything you’re reclaiming through the EPS. If your average monthly bill is under £1,500, you can arrange to pay quarterly instead.
Keep a record of what you paid and when. The P32 is the summary of your monthly PAYE liability, and it’s the figure you reconcile against what actually left your bank account. Our guide to the P32 explained shows how to use it to stay straight with HMRC.
Your monthly payroll checklist
Once you’re set up, payroll settles into a rhythm. Here’s the recurring cycle for a typical month:
- Enter any changes: new starters, leavers, pay rises, or hours.
- Run payroll in your software and check the figures look right.
- Send the FPS on or before payday.
- Give every employee their payslip.
- File an EPS if you’re reclaiming statutory pay or claiming the Employment Allowance.
- Pay HMRC by the 22nd (or 19th by post).
- File the payslips and reports for your records.
Do this consistently and payroll for a small team is a predictable job. The errors creep in when a month is skipped or rushed.
What happens at year end
At the end of the tax year on 5 April, payroll has a few extra jobs on top of the usual cycle. You finalise your last submission for the year, then hand out year-end documents and get ready for new rates.
The main year-end tasks are:
- Send your final FPS or EPS for the year by 19 April.
- Give every employee still working for you a P60 by 31 May, summarising their pay and deductions for the year.
- Update tax codes and any changed rates or thresholds for the new tax year before your first April pay run.
If a P60 is new territory, the how to read a P60 guide explains what each box means, which helps when an employee inevitably asks.
The things that make payroll complicated
Standard monthly payroll is manageable. It’s the exceptions that catch DIY employers out, because each one has its own rules and its own deadline. These are the situations where a quiet payroll suddenly needs attention:
- A leaver mid-month: you produce a P45, report the leaving date on the FPS, and make sure their final pay is right.
- Statutory sick pay:SSP is £123.25 a week for 2026/27, now paid from day one of sickness with the old waiting days removed since 6 April 2026.
- Statutory maternity pay:SMP is £194.32 a week (after the first six weeks at 90% of average earnings), with its own qualifying tests and forms.
- A backdated pay rise: you recalculate and report the correct figures rather than guessing.
- A new starter with no P45: you use the starter checklist and a temporary tax code until HMRC updates it.
- Someone crossing the auto-enrolment threshold: a pay rise can suddenly make a worker eligible for a pension, and you have to act on it.
Each of these is doable, but each is also a place where a wrong figure affects someone’s actual pay. The true cost of employing someone covers how statutory pay and employer costs add up once you’re past a single salary.
If you’re a sole director paying yourself
A sole director paying themselves a regular salary is the clearest case where running payroll yourself genuinely makes sense. There’s one person, a fixed amount, usually no pension duty, and no statutory pay to juggle.
You still register as an employer, still file an FPS on or before each payday, and still pay HMRC on time. But with one steady salary and no moving parts, it’s a short, repeatable job that many directors handle comfortably in-house.
The moment that changes is when you hire. A first employee brings pension assessment, payslips for someone else, and the real possibility of statutory pay, which is a different level of responsibility from paying yourself.
When to hand payroll over
Hand payroll over when the error risk starts to outweigh the saving, and there are clear signals for that. It’s less about the number of people and more about how much can go wrong.
Consider outsourcing if any of these apply:
- You have more than a handful of employees.
- Anyone is receiving, or about to receive, statutory sick or maternity pay.
- You have high staff turnover, so leavers and starters are constant.
- You’ve already missed an RTI submission or a payment deadline.
- Payroll is eating time you’d rather spend running the business.
That last point is the honest one. If you’re spending more time fixing payroll than the fee to outsource it would cost, the maths has already answered the question. It’s worth comparing your options against the case for payroll outsourcing rather than pushing through.
How Sleek helps with running payroll
Running payroll yourself is entirely doable for a single director or a small, steady team, and we’d rather you knew that than paid for something you don’t need. The tipping point is statutory pay, staff changes, and RTI deadlines, where a small mistake affects someone’s wages.
That’s where a real, qualified accountant earns their place. Sleek runs payroll for businesses of any size, from a single director to a growing team, with a human accountable for the numbers and the filings kept on time. No outsourcing, no guesswork.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
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FAQs on how to run payroll yourself
Can I run payroll myself in the UK?
Yes. You can legally run your own payroll once you register as an employer with HMRC and use recognised software that submits Real Time Information. There’s no requirement to use an accountant. The practical question is whether you have the time and confidence to hit an FPS deadline every payday and handle pensions and statutory pay correctly.
Do I need payroll software, or can I use a spreadsheet?
You need HMRC-recognised payroll software. A spreadsheet can’t submit the Real Time Information returns HMRC requires on or before each payday, so it isn’t a compliant option on its own. Recognised software also calculates tax, National Insurance, and pension contributions, and produces the payslips employees are legally entitled to receive.
Is HMRC’s Basic PAYE Tools good enough?
For very simple payrolls, often yes. It’s free and HMRC-recognised, and it suits employers with fewer than 10 staff. The limits matter, though: it doesn’t produce payslips or handle auto-enrolment pension assessment on its own, so if you have employees you’ll likely need extra tools alongside it or a commercial package instead.
What is RTI and when do I have to submit it?
Real Time Information is HMRC’s system for reporting pay and deductions as they happen. You submit a Full Payment Submission on or before every payday, reporting what each employee earned and what you took off. A separate Employer Payment Summary is filed by the 19th of the following month when you’re reclaiming statutory pay or claiming the Employment Allowance.
What happens if I submit RTI late?
HMRC charges a monthly penalty based on your headcount, from £100 for 1 to 9 employees up to £400 for 250 or more. You get one unpenalised default per tax year, plus an informal three-day grace period. Repeated late filing stacks the penalties up quickly, so it’s the deadline most worth protecting.
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Do I have to set up a workplace pension for one employee?
Yes, if that employee is eligible. Auto-enrolment applies from your first payday, and any worker aged 22 to State Pension age earning over £10,000 must be assessed and enrolled. A sole director with no employment contract usually falls outside it, but once you employ someone who qualifies, the full pension duties apply to you.
How do I handle someone leaving mid-month?
Process their final pay as normal, then produce a P45 through your software and record the leaving date on your Full Payment Submission. Give the employee their P45 so their next employer has the right tax details. Make sure any outstanding holiday pay or final adjustments are included before you finalise the run.
