Adding starters to payroll in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
When a new employee joins your business in the UK, you must collect specific information from them, register them with HMRC through your payroll software, and make the correct deductions from their first pay run. Miss any of these steps and you risk the wrong tax code, late reporting penalties, or an unhappy new starter.
What you need from the new employee
Before you can add someone to payroll, you need a few things from them:
Their starter information. Since the paper P45 was replaced as the primary onboarding mechanism, your payroll software will prompt you to collect a starter checklist declaration. The employee picks one of three statements:
- Statement A — this is their only or main job, and they have not had another job or received a taxable state benefit since the start of the tax year.
- Statement B — this is their only job, but they have had another job or received a taxable state benefit since the start of the tax year.
- Statement C — they have another job or pension running alongside this one.
The statement determines the emergency or cumulative tax code HMRC assigns. If you receive a P45 from a previous employer instead, use the tax code and pay figures on that document.
Their National Insurance number. You should make every reasonable effort to obtain this before the first payday. If the employee does not yet have one, proceed with the correct NI category letter and update the record once the number is confirmed.
Their date of birth. This affects NI category and, eventually, pension auto-enrolment eligibility.
Right to work evidence. This is a legal requirement separate from payroll, but it belongs in the same onboarding checklist.
Setting up the payroll record
Once you have the starter information, open a new employee record in your payroll software. The key fields to populate correctly are:
- Full legal name and address — must match HMRC records.
- Date of birth and gender — used for NI calculations.
- NI number and NI category letter — category A applies to most employees under state pension age.
- Start date — the date employment began, not the date you add them to the system.
- Tax code — derived from the starter checklist or P45. Statement A normally produces the standard cumulative code (1257L for the 2026/27 tax year, based on the £12,570 personal allowance). Statements B and C trigger week 1/month 1 (non-cumulative) codes.
- Pay frequency and salary or hourly rate.
Do not guess or leave defaults in place. An incorrect tax code means the employee either overpays or underpays income tax, and correcting it mid-year creates confusion.
Auto-enrolment assessment
Every new starter must be assessed for pension auto-enrolment on or before their first payday. The assessment checks their age and qualifying earnings against the relevant thresholds. If they are an eligible jobholder, you must enrol them into a qualifying workplace pension scheme and apply the minimum contributions: at least 3% from you as the employer and at least 5% from the employee, calculated on qualifying earnings. You must also provide a written enrolment notice within six weeks of the trigger date.
Employees may opt out, but you cannot encourage them to do so or make opting out a condition of employment.
Reporting to HMRC on or before the first payday
UK payroll operates under Real Time Information (RTI). Every time you pay an employee, you must submit a Full Payment Submission (FPS) to HMRC on or before the payment date — not monthly, not retrospectively. For a new starter, the FPS carries the starter declaration code alongside their payment details. HMRC uses this to set up or update the employee's record on its side.
If you discover an error after submission, you correct it on the next FPS or, where necessary, submit an Earlier Year Update after the tax year closes. There is no facility to simply delete and resubmit.
Day-one employment rights
The Employment Rights Act 2025 has strengthened day-one rights considerably. From their first day, employees are entitled to a written statement of particulars, protection against unfair dismissal in certain circumstances, and access to statutory sick pay and statutory family leave provisions. None of these are payroll calculations in the strict sense, but several of them — SSP, statutory maternity pay, paternity pay — flow through payroll, so your payroll record needs to be complete and accurate from day one, not just from the end of a probation period.
Employees are also entitled to 5.6 weeks of statutory annual leave (28 days including bank holidays for someone working a standard five-day week), and accrual begins immediately on the first day of employment.
Keeping records
You are required to keep payroll records for at least three years after the end of the tax year they relate to. This includes the starter checklist or P45, payslips, FPS submissions, and auto-enrolment correspondence. At the end of each tax year, issue a P60 to every employee still on your payroll by 31 May.
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