Taking on your first employee feels like a milestone, and it is. It also makes you, overnight, a collector of tax for HMRC, a pension provider and the person responsible if someone is paid a penny under the minimum wage. Payroll is less complicated than its reputation suggests, but it is not forgiving. At Walden Way & Co we provide payroll services in the Royal Docks for employers of every size, and most of the payroll problems we are asked to fix could have been avoided in the first month.

Register before the first payday

You must register as an employer with HMRC before you pay anyone, and you cannot run payroll until you have your PAYE reference. Registration can take a couple of weeks, so start it as soon as an offer is accepted, not on the Friday before the first pay run.

The 2026/27 figures every employer should have to hand

Check these on GOV.UK before each new tax year. The rates change every April, and announcements in the autumn Budget can affect the following year.

The monthly rhythm

•     On or before payday: send the Full Payment Submission (FPS) to HMRC. Late FPS filings attract penalties that rise with the number of employees.

•     By the 19th of the following month: send an Employer Payment Summary (EPS) if you are claiming Employment Allowance, statutory pay recovery or had no payments that month.

•     By the 22nd: pay HMRC the PAYE and National Insurance due, if paying electronically.

•     Every month: deduct pension contributions and pay them to the scheme on time.

Payroll problems specific to the Royal Docks

A lot of employers around Royal Victoria Dock and Silvertown run event, hospitality or venue teams whose hours swing with the ExCeL calendar. That brings three recurring problems.

First, holiday pay for irregular hours. For leave years starting on or after 1 April 2024, employers can accrue holiday for irregular-hours and part-year workers at 12.07% of hours worked, and can pay rolled-up holiday pay if it is shown separately on the payslip. Many small employers still use older methods that no longer fit the rules.

Second, tips. Since 1 October 2024, employers must pass all tips, gratuities and service charges to workers fairly, with a written policy. How those tips are paid also affects whether National Insurance is due.

Third, minimum wage checks in busy weeks. Unpaid training, uniform costs deducted from pay or time spent setting up before a shift can push someone’s effective hourly rate below the legal minimum, even when their headline rate looks fine.

Should you outsource payroll?

If you have one or two salaried staff on fixed pay, payroll software and an hour a month may be enough. Outsourcing makes sense once hours vary, staff join and leave regularly, or you are running statutory sick, maternity or paternity pay. It also makes sense if you simply do not want to be the person explaining a tax code to a team member. A good provider of payroll services in the Royal Docks or anywhere else keeps the records, deals with HMRC letters and tells you about changes before they hit your payslips. One coming change is mandatory payrolling of benefits in kind, due from April 2027.

Questions to ask a payroll provider

•     Who checks the pay run before it is submitted, and what is the cut-off for changes?

•     Do you handle pension auto-enrolment, re-enrolment and the declaration of compliance?

•     How do you deal with starters, leavers and variable hours?

•     Is the fee fixed per employee, and what costs extra?

Frequently asked questions

When do I need to start running payroll? You need to register and run payroll once you employ anyone, including yourself as a company director, if you pay at or above the Lower Earnings Limit. Even below that limit, HMRC usually expects payroll records to be kept.

What happens if I miss an FPS deadline? HMRC can charge monthly late filing penalties based on how many employees you have, plus interest on late payments. Repeated lateness gets noticed.

Can a small business run payroll in-house? Yes. HMRC offers free Basic PAYE Tools for employers with fewer than ten employees. Most small businesses find that time and the risk of errors make outsourcing worthwhile once they have more than a handful of staff.