Taking on your first employee means registering as an employer and getting PAYE working through your Government Gateway account before that first payday arrives. The registration itself and adding PAYE to your online account are connected but not always automatic, and there’s a strict deadline for activating it once HMRC sends your code. Here’s how the whole process fits together.
- What you’ll need before you start
- Which situation you’re in
- How to add PAYE to your Government Gateway account
- Timing — when to register
- Letting your accountant run payroll for you
- Common problems and how to fix them
- Frequently asked questions
What you’ll need before you start
- Your Government Gateway user ID and password for the business (an Organisation account for limited companies)
- Your Employer PAYE Reference, in the format 123/AB456
- Your Accounts Office Reference, used when you actually pay HMRC
- Basic business details — name, address, and roughly how many people you plan to employ
If you haven’t registered as an employer with HMRC yet, do that first at gov.uk/register-employer — you can’t add PAYE to a Gateway account until HMRC has issued these reference numbers.
Which situation you’re in
You registered as an employer online
If you registered as an employer through the online service, you are automatically enrolled for PAYE Online at the same time. HMRC then posts an activation code, which you need to enter within a set window (see below) to finish setting things up.
You registered by phone or by post
If your employer registration was done over the phone or by post — sometimes the case with older businesses or ones set up by an accountant some time ago — you’ll need to actively enrol for PAYE Online yourself using the steps below, rather than waiting for it to appear automatically.
How to add PAYE to your Government Gateway account, step by step
Step 1 — Sign in to your business tax account
Go to gov.uk/log-in-register-hmrc-online-services and sign in with the business’s Government Gateway details.
Step 2 — Find the option to add a tax, duty or scheme
From the business tax account home screen, choose the option to add a tax, duty or scheme.
Step 3 — Select PAYE for employers
Look for an option along the lines of ‘Employers or intermediaries, for example PAYE for employers or CIS’, then choose PAYE for employers specifically.
Step 4 — Enter your employer references
Enter your Employer PAYE Reference and Accounts Office Reference exactly as shown on the letters HMRC sent when you registered as an employer.
Step 5 — Review and submit
Check the details against your HMRC paperwork before confirming.
Step 6 — Activate within 28 days
HMRC posts an activation code, usually within 10 days. You must activate the service within 28 days of the date on that letter. Miss the window and the code expires, meaning you’ll need to enrol for PAYE Online again from scratch.
Timing — when to register
Register as an employer before your first payday, but no earlier than two months before your first employee actually starts. HMRC can take up to 15 working days to issue your employer reference, so leaving registration until the week before payday is a common way to end up running payroll without the references you need. Build in a buffer, especially if you’re taking on staff for the first time.
Letting your accountant run payroll for you
Many businesses hand PAYE and payroll to their accountant entirely rather than dealing with Government Gateway logins and activation codes themselves. Authorising an agent gives your accountant access to run payroll and deal with HMRC directly, separately from your own Gateway account. At NDCA, this is how we handle payroll for clients — RTI submissions, payslips and pension duties handled monthly without you needing to touch the HMRC portal. Book a free 15-minute call if you would like us to take it on.
Common problems and how to fix them
The activation code arrived too late, or you missed the 28-day window
The code expires after 28 days from the letter date. If that’s happened, you’ll need to enrol for PAYE Online again and wait for a new code.
You don’t have your employer references yet
You can’t add PAYE to Government Gateway until HMRC has actually issued your Employer PAYE Reference and Accounts Office Reference. If it’s been longer than 15 working days since you registered as an employer, check the registration went through, or contact HMRC.
You’re using the wrong Government Gateway account
PAYE needs to sit on the same Organisation account you use for the business generally. If you’ve ended up with more than one Gateway ID over time, work out which one is actually linked to your employer registration.
Payroll software isn’t picking up your PAYE details
Once PAYE is active in your Government Gateway account, most payroll software (including Xero) needs your Employer PAYE Reference and Accounts Office Reference entered separately in the software itself, plus your Gateway credentials for filing RTI submissions. Adding it to Government Gateway doesn’t automatically configure your payroll software.
Frequently asked questions
Do I need to register as an employer and add PAYE to Government Gateway separately?
If you register as an employer online, both happen together and you’re automatically enrolled for PAYE Online. You still need to activate it using the code HMRC posts you.
How long does the whole process take from start to finish?
Allow up to 15 working days for your employer reference to be issued, then up to 10 days for the activation code to arrive by post, and you must activate within 28 days of that letter. In practice, starting the process at least a month before your first payday is sensible.
What happens if I miss my first payday without PAYE set up?
You can still pay employees, but you need to be able to report to HMRC through PAYE on or before each payday under Real Time Information rules. If your references haven’t come through yet, keep clear records and get RTI submissions up to date as soon as PAYE is active, and speak to your accountant about how to handle the gap.
Can my accountant handle PAYE registration and payroll for me?
Yes, this is one of the most commonly outsourced parts of running a small business. If you’d rather not deal with Government Gateway and activation codes at all, we can register and run payroll for you as part of our standard service.
