PAYE and payroll for employers

Skip contents

Keeping records

You must collect and keep records of:

Your records must show you’ve reported accurately, and you need to keep them for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure you’re paying the right amount of tax.

There are different rules for keeping records to prove you have paid the correct minimum wage.

If you do not keep full records, HMRC may estimate what you have to pay and charge you a penalty of up to £3,000.

If your records are lost, stolen or destroyed

Tell HMRC as soon as possible if you do not have records and cannot replace them. You must also do your best to recreate them - HMRC may be able to help if you’re not sure how much you paid your employees.

You must tell HMRC if your final payroll report of the tax year includes figures that are:

  • estimated - that you want HMRC to accept as final
  • provisional - that you’ll update later with actual figures

Data protection

You must follow rules on data protection if your business stores or uses personal information.

  1. Step 1 Decide what type of employee you need

  2. and Check you can afford to take on employees

  3. Step 2 Make your workplace safe and accessible for employees

  4. Step 3 Register as an employer and set up PAYE

    You need to register with HMRC so you can pay tax and national insurance for your employees.

    1. Register as an employer and set up PAYE
    2. Choose how to run payroll
    3. If you decide to run payroll yourself, choose payroll software
  5. Step 4 Check your responsibilities around workplace pensions

  6. Step 5 Get Employers' Liability insurance

  7. Step 6 Recruit and employ staff