Business
United Kingdom — Business: Payroll
UK employers pay 15% secondary Class 1 National Insurance above a GBP 5,000 annual threshold and can claim a GBP 10,500 Employment Allowance from April 2026.
VerifiedGovernment / official sourceGOV.UK — Employer PAYE and National Insurance: rates and Employment AllowanceLast reviewed: 2026-10-23
Why this matters
Understanding UK payroll requirements is crucial for businesses relocating to the UK, as failure to comply can result in penalties and fines.
Key facts
- The employer secondary Class 1 threshold is GBP 5,000 a year (GBP 96 a week, GBP 417 a month) from 6 April 2025 until 5 April 2028, with the employer rate at 15% above it.
- The Employment Allowance is GBP 10,500 from 6 April 2026, and the former GBP 100,000 liability cap no longer applies.
- It is not available to certain domestic employers, public authorities (unless a charity), connected employers already claiming, or companies whose only paid employee is the director.
- Employers with several PAYE schemes can claim from only one scheme in a year; the claim is made through payroll software with an Employer Payment Summary.
- Employer PAYE records must be kept for 3 years from the end of the tax year they relate to.
Steps
- Setting Up a UK PAYE Scheme — Employers must register with HMRC online or by phone, providing required information about their business and employees.
- Calculating Employee Salaries and Deductions — Employers must calculate employee salaries, including income tax, national insurance contributions, and other deductions, using HMRC's tax tables and guidance.
- Submitting Payroll Returns to HMRC — Employers must submit payroll returns to HMRC on time, usually within the deadlines for the relevant tax period.