Do I need to run payroll if I'm only hiring one part-time person?

Yes. There's no minimum headcount and no small-employer exemption — the obligations attach to having an employee, not to having several. You register with HMRC, run a payroll each pay period, and submit a Full Payment Submission on or before payday, exactly as a business with fifty staff does. There is one narrow simplification: if every employee earns below the Lower Earnings Limit and none has another job or a pension, you may not need a PAYE scheme at all. That's a genuinely small category, and it stops applying the moment anyone's pay rises or they take a second job, so most first hires do need a scheme.

Do I have to enrol a part-timer earning under £10,000 into a pension?

Not automatically, but don't stop there. The £10,000 earnings trigger decides who you must enrol without being asked. Below it, staff aged 16 to 74 still have the right to ask to join a scheme, and where they earn above the qualifying earnings floor of £6,240 you have to contribute if they opt in. Below £6,240 you must still allow them to join, though you aren't obliged to pay in. The practical point is that you assess every member of staff at every pay run rather than deciding once — someone who picks up extra hours can cross the trigger without either of you noticing.

What happens if I pay someone before I've registered as an employer?

You end up with a payment you cannot report on time, because the Full Payment Submission needs the employer PAYE reference that registration produces. You should register immediately and report the payment as soon as the reference arrives, explaining the delay. HMRC will usually accept a late first submission — the first late report in a tax year doesn't attract a penalty — but you've spent your one free pass in week one, and every late month afterwards costs £100 for an employer with up to nine staff. The fix is simply sequencing: register first, then agree the start date, then pay.

Could I take them on as a self-employed contractor instead?

Only if the working relationship genuinely is self-employment, and for a first hire filling a role in your business it usually isn't. Employment status is decided by how the work actually happens — who controls it, whether the person must do it personally, whether there's mutual obligation to offer and accept work — not by what the contract calls it or by the person invoicing you. Get it wrong and HMRC can assess you for the PAYE and National Insurance you should have deducted, plus interest and penalties, and you'd owe holiday pay too. If the arrangement looks like a job, treat it as one.

Payroll for your first hire: what changes

Q: Can I claim the Employment Allowance once I take on my first employee?

Usually yes, and it's often worth more than the hire costs you in National Insurance. The allowance is worth up to £10,500 a year against your employer's Class 1 NI bill. The restriction that blocks most one-person companies is that it can't be claimed where the only employee paid above the secondary threshold is a director — take on a first non-director employee and that restriction no longer applies. On a £30,000 salary the employer's NI is £3,750, so the allowance typically wipes it out entirely. You claim it through your payroll software, and it doesn't carry over, so an unclaimed year is simply lost.

Taking on your first employee is a genuine milestone — it usually means the business has grown to the point where you can't, or shouldn't, keep doing everything yourself. It also means payroll stops being theoretical and becomes something you're legally responsible for getting right, on time, every time. Here's what actually changes, with the 2026/27 numbers attached.

The moment payroll becomes real

Up until your first hire, payroll simply hasn't applied to you. The moment someone else is on the payroll, a set of ongoing obligations kicks in: registering as an employer, running payroll correctly each pay period, reporting to HMRC in real time, and making sure the right deductions and contributions happen automatically in the background rather than being worked out after the fact.

It's also the point at which the business stops being just about you. Deadlines, obligations and someone else's livelihood are now tied to how well you run this part of things — which is exactly why it's worth getting properly set up rather than improvising with whatever seems to work for the first few payslips.

What you need in place before day one

Register as an employer with HMRC before the first payday. There's a window either side of that: you can't register more than two months before you start paying anyone, and you can't leave it until after the first payslip. Registration gives you the employer PAYE reference your payroll software needs, so leaving it late blocks everything downstream.

You then need payroll software that reports Pay As You Earn information in real time. That isn't optional and it isn't a spreadsheet — a Full Payment Submission has to reach HMRC on or before the day you pay someone, every time. You'll also need the employee's starter details and tax code set correctly from payslip one, because an incorrect code is far easier to avoid than to unpick three months later.

The pay rate has a legal floor

Before you agree a salary, check it clears the minimum. From 1 April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour. For 18 to 20-year-olds it's £10.85, and for under-18s and apprentices in the first year it's £8.00.

Turn that into an annual figure, because that's the number you actually budget with. A full-time role at 37.5 hours a week is 1,950 hours a year. At £12.71 that's a floor of £24,784 for anyone aged 21 or over. Offer £23,000 for a full-time role and you are not making a keen offer — you are non-compliant, and HMRC names employers who underpay.

What a £30,000 hire actually costs: the worked numbers

Here's the calculation most first-time employers do too late. Say you agree a salary of £30,000.

Employer's National Insurance. You pay 15% on everything above the secondary threshold of £5,000 a year. So (£30,000 − £5,000) × 15% = £3,750.

Pension. Auto-enrolment contributions are worked out on qualifying earnings — the slice between £6,240 and £50,270. That's £30,000 − £6,240 = £23,760. The minimum total contribution is 8%, of which at least 3% must come from you: £23,760 × 3% = £713.

The gross cost is therefore £30,000 + £3,750 + £713 = £34,463 — around 15% more than the headline figure, before you've bought a laptop.

Now the part that surprises people in the other direction. The Employment Allowance is worth up to £10,500 a year against your employer's NI bill. A one-person limited company usually can't claim it, because it's unavailable where the only employee paid above the secondary threshold is a director. Take on a first non-director employee and that restriction falls away — so the £3,750 of employer's NI is typically wiped out entirely.

Which leaves a real cash cost of roughly £30,713 plus equipment, software licences and the ramp-up period before the person is fully productive. Budget three months of partial output and you won't be caught out. It's a genuinely better number than most owners expect, and it's worth knowing before you decide you can't afford the hire.

Running payroll properly, every month

Once someone's employed, payroll isn't an annual task, it's a recurring one — weekly, fortnightly or monthly. Each run has to calculate gross pay, deductions and net pay correctly, and report to HMRC on or before payday. The PAYE and NI you've deducted then go to HMRC by the 22nd of the following month if you pay electronically, or the 19th if you pay by post.

Miss the reporting deadline and there's a penalty. For an employer with 1 to 9 employees it's £100 a month, rising to £200 for 10 to 49, £300 for 50 to 249 and £400 for 250 or more. HMRC does let the first late submission in a tax year go without a penalty, which is a useful safety net exactly once — after that, every late month costs.

Getting the figures wrong matters more than the admin. It affects your employee's tax position and can affect their entitlement to state benefits, which is why this is one area worth setting up properly rather than running on a spreadsheet and hoping.

Pensions come with the territory

Your automatic enrolment duties start on the day your first employee starts — there's no grace period and no separate registration you can put off. You assess each member of staff, and anyone aged between 22 and State Pension age earning over the £10,000 earnings trigger must be enrolled into a qualifying workplace pension, with contributions running alongside payroll.

You then have to complete a declaration of compliance with The Pensions Regulator within five months of your duties start date. It takes about fifteen minutes if your records are in order. It is also the single most commonly missed obligation for first-time employers, because nothing prompts you — the deadline just passes.

Staff below the trigger aren't automatically enrolled, but they can ask to join, and depending on what they earn you may still have to contribute. Assess everyone; don't assume a part-timer is out of scope.

Your before-payday checklist

Register as an employer with HMRC — before the first payday, and no more than two months ahead of it.
Check the agreed rate clears the legal minimum for the employee's age. Annualise it: hours × 52 × the rate.
Set up RTI-capable payroll software and enter the starter details and tax code.
Choose a pension scheme and confirm it qualifies for automatic enrolment, before day one rather than after.
Diarise two recurring dates: payday (FPS due on or before) and the 22nd (payment due).
Put the declaration of compliance in the calendar for four months after the start date, so you're not relying on remembering it in month five.
Issue a written statement of employment particulars — it's due on or before the first day.
Add the fully-loaded cost, not the salary, to your cashflow forecast.

What tends to go wrong

The common mistakes aren't complicated ones. Registering as an employer too late and having no PAYE reference on payday. Missing the auto-enrolment declaration. Getting a starter's tax code wrong on the first payslip. Budgeting on the salary and finding £4,500 of on-costs you hadn't planned for. Not claiming the Employment Allowance you became entitled to the moment you hired someone.

None of these are difficult to avoid. All of them are much harder to correct after the fact, particularly once HMRC or The Pensions Regulator is involved.

Where Buzz fits in

This is exactly what our payroll and pensions service handles — a specialist team making sure your people are paid correctly and on time, every time, so a first hire doesn't become a new monthly source of admin. If you want to go deeper on the numbers first, what a new hire actually costs breaks the full arithmetic down, and if you're approaching your first hire, get in touch and we'll walk you through what needs to be in place before payday.