Taking on and registering a new employee
A plain-English guide to employing new staff in the UK: right to work checks, P45 or starter checklist, tax codes, payroll setup and reporting to HMRC.
Bringing a new person onto the payroll involves more than agreeing a start date and a wage. There are checks to carry out and details to collect before their first payday, and specific things you must report to HMRC. This guide sets out the steps in plain English.
Step one: check the right to work in the UK
Before employing anyone, you must check they have the legal right to work in the UK. This applies to every new employee, not just those from overseas. You either check original documents, such as a passport, or use the Home Office online right to work service where the person has a share code.
Keep a clear record of the check, including the date you carried it out. A correct check gives you a statutory excuse against a penalty if it later turns out the person could not work here. Skipping the check can lead to serious fines, so it is not a step to rush.
Step two: collect the employee’s details
Next, gather the information you need to run their pay. This includes their full name, address, date of birth, National Insurance number and start date, plus their bank details for payment.
Crucially, you need their starter information for tax:
- If they have a P45 from a recent job, it shows their pay and tax so far this year and their tax code.
- If they have no P45, for example it is their first job or they have lost it, they complete the HMRC starter checklist. This gathers the same details, including which statement best describes their situation and their student loan position.
The starter checklist replaced the old P46, so if anyone mentions “filling in a P46” they mean the checklist.
Step three: work out the correct tax code
From the P45 or starter checklist, you work out the employee’s tax code. The code tells your payroll how much tax-free pay they get and therefore how much tax to deduct.
- A P45 usually gives you the code to carry forward.
- The starter checklist points you to the right starting code based on which statement the employee selected, for example whether this is their only job.
Using the wrong code means the employee pays too much or too little tax, so it is worth getting right from day one. HMRC may later send you a tax code notice telling you to change it.
Step four: set the employee up in payroll
Now add the employee to your payroll software with their details, start date, pay rate and tax code. This is also the point to set up their pension position, ready for the auto-enrolment assessment below.
Step five: report the new starter to HMRC
You do not file a separate form to register a new starter. Instead, you report them to HMRC through your payroll on the first Full Payment Submission (FPS) that includes them. This FPS is sent on or before their first payday under Real Time Information (RTI), and it flags the new employee to HMRC automatically. Sending it on time is important, as late submissions can lead to penalties.
Step six: assess them for auto-enrolment
Every new employee must be assessed for auto-enrolment into a workplace pension. The assessment looks at their age and earnings:
| If the employee is… | You must… |
|---|---|
| An eligible jobholder (meets age and earnings thresholds) | Automatically enrol them and contribute |
| A non-eligible jobholder | Not enrol automatically, but let them opt in |
| An entitled worker | Not enrol automatically, but let them join a scheme |
You must assess every new starter, write to them about their pension rights, and handle any request to opt in or opt out. These duties apply however small your business is.
Step seven: give a written statement of employment particulars
Most new employees are legally entitled to a written statement of employment particulars, and you must provide the main terms on or before their first day. It typically covers:
- Job title and start date
- Pay and how often it is paid
- Hours of work
- Holiday entitlement
- Notice periods
- Place of work
This written statement is a legal requirement, and getting it in place early avoids disputes later.
Getting a new starter right
Taking on staff means several checks and reports lining up before the first payday: right to work, starter details, the correct tax code, payroll setup, the FPS to HMRC, auto-enrolment and the written statement. Miss one and you risk penalties or an incorrect first payslip.
We handle the payroll side of new starters as part of running your payroll, from the correct tax code to the FPS and the auto-enrolment assessment. Learn more about our outsourced payroll service, or get a quote.