Payroll & PAYE Made Simple

Yes, if you're a director of a UK limited company and pay yourself a salary, you must register as an employer with HMRC and run payroll. This applies even if you're the only director and employee. You'll need to report payments to HMRC in real-time using RTI (Real Time Information) and provide payslips.

RTI is the system HMRC uses to collect PAYE information. Every time you pay an employee or yourself, you must report the payment details to HMRC on or before the payment date using a Full Payment Submission (FPS). This replaced the old annual P35/P14 system and helps HMRC track tax and National Insurance contributions in real-time.

Most directors pay themselves a combination of salary and dividends. The tax-efficient approach is to pay a salary up to the personal allowance (£12,570 for 2026-27) to avoid Income Tax while building National Insurance credits, then take additional income as dividends which are taxed at lower rates. AccountsOS helps you calculate the optimal split.

Key deadlines include: FPS submissions must be made on or before each payday, monthly PAYE payments to HMRC are due by the 22nd of the following month (or 19th if paying by post), P60s must be given to employees by 31st May after the tax year ends, and P11D forms for benefits in kind are due by 6th July.

Directors can choose between two National Insurance calculation methods: the 'annual earnings period' method (which spreads the NI thresholds across the full year, often resulting in lower NI) or the standard 'alternative method' used for regular employees. Most directors benefit from the annual method, especially if paid irregularly or in lump sums.