The UK New Employee Checklist for Employers

A UK employer must tell HMRC about a new employee on or before that person's first payday, and must complete a right to work check before employment begins or risk a civil penalty of up to £45,000 for each illegal worker on a first breach ^{[1] [4]}. Hiring in the UK is not simply a matter of agreeing a salary. It is a sequence of legal, tax and pension obligations, several of which have to be finished before the first day.

Getting the sequence wrong is expensive in more than one way. A missed right to work check carries a five-figure fine, a late first Full Payment Submission risks a PAYE penalty, and a mishandled starter declaration lands the new employee on the wrong tax code and generates a stream of corrections ^[1]. Each of these is avoidable with a clear checklist run in the right order.

This article sets out that checklist end to end: the pre-employment legal checks, registering as an employer where needed, the written statement of employment particulars, collecting the correct tax details, student loan and pension duties, and the first payroll submission to HMRC. It closes with a single summary table an employer can work through for every hire.

Key takeaways

• A right to work check must be completed before employment starts, with records kept for the duration of employment plus two years.
• A first-time employer must register a PAYE scheme with HMRC, and cannot do so more than two months before the first payday.
• The principal written statement of employment particulars is a day-one right and must be given on or before the first day.
• Where a new starter has no P45, the starter checklist sets the starter declaration (A, B or C) and the starting tax code.
• HMRC must be told about the new employee through the first Full Payment Submission, on or before the first payday.

Before the first day: the legal checks every employer must complete

Two checks belong firmly before the employee starts work, not after. Skipping either is the most common and most costly onboarding mistake a UK employer makes.

Right to work checks

Every employer, whatever its size or sector, must confirm that a new hire has the legal right to work in the UK before employment begins, and must apply the same check to every worker regardless of nationality ^[4]. There are three permitted routes: a manual check of original documents, the Home Office online checking service, and a certified digital identity verification service for British and Irish citizens ^[5].

The stakes are high. Where an employer fails to carry out a compliant check and someone is found working illegally, the civil penalty starts at up to £45,000 per illegal worker for a first breach and rises for repeat breaches ^[4]. The employer must keep a clear copy of the evidence for the whole period of employment and for two years afterwards, because the record is what establishes a statutory excuse if a worker's status later turns out to be irregular ^[4].

Registering as an employer for PAYE

A business taking on its first employee has to register a PAYE scheme with HMRC before the first payday ^[3]. The timing is narrow at both ends. An employer cannot register more than two months before starting to pay someone, and HMRC can take up to 15 working days, and in some cases considerably longer, to issue the employer PAYE reference and Accounts Office reference by post ^[3].

The practical advice is to work backwards from the intended first payday and register roughly four to six weeks ahead, so the reference numbers arrive in time to run the first payroll ^[3]. An employer already running a scheme does not repeat this step; the existing references carry the new hire. Businesses setting up their first scheme often lean on HMRC-recognised payroll software for SMEs to hold those references and file the returns correctly from the first month.

The employment contract and written statement

Alongside the tax and immigration steps sits an employment law duty. Since 6 April 2020, every employee and worker has a day-one right to a written statement of the main terms of their employment ^[6]. This is not the same as a full contract, though it is usually delivered as part of one.

What the principal statement must contain

The principal statement must be provided on or before the first day of employment, and most mandatory terms have to sit in that single document ^[6]. The table below lists what belongs in the day-one statement.

The variation point matters for zero-hours and irregular-hours roles: the statement must say if hours vary and how that variation is determined, rather than quoting a fixed figure that does not reflect reality ^[6].

What can follow within two months

A small number of items are allowed to follow later. Pension arrangements, any collective agreements, and disciplinary and grievance procedures may be provided within two months of the start date rather than on day one ^[6]. Everything else, including pay and hours, has to be in the day-one statement, so an employer cannot defer the core terms while a fuller contract is drafted ^[6].

Getting the employee's tax details right

The next block of the checklist determines how the employee is taxed from their first payslip. The goal is to start the person on the correct tax code so their take-home pay is right and no correction is needed later.

Using a P45

A new starter who has recently left another job brings a P45 from that employer. It carries the pay and tax to date for the current tax year, the National Insurance number, the current tax code and the student loan position ^[1]. The employer uses the most recent P45 where an employee has more than one, and keeps the details in the payroll records for the current tax year and the following three ^[1].

The P45 only carries forward figures for the current tax year. If the employee left their previous job in an earlier tax year, the year-to-date figures are stale and the employer uses the starter checklist instead to establish the starting position ^[1].

When there is no P45: the starter checklist

Where a new starter has no usable P45, the employer collects the same information through the starter checklist, which replaced the old P46 form ^[9]. The checklist sets the starter declaration, which drives the starting tax code. The employee does not send the checklist to HMRC; they give it to the employer to use in the first FPS ^[9].

There are three starter declarations, and the difference between them decides whether the employee gets a full tax-free allowance from day one.

Declaration A is the most favourable to the employee and declaration C the least, because it applies basic rate to the whole salary with no personal allowance ^[9]. Where the employee is unsure which applies, the cautious default is declaration B ^[9].

Emergency tax codes and how they resolve

If an employer has to run the first payslip before full details arrive, the employee usually goes onto an emergency code, most commonly 1257L on a Week 1 or Month 1 basis ^[8]. This taxes each pay period in isolation rather than cumulatively, so the employee can slightly over or underpay until the code is corrected.

Emergency codes are temporary and self-correcting. Once the employer submits the starter information or HMRC receives the P45 details, HMRC issues the right code, which can take a few weeks to come through ^[8]. Employers who want to confirm what a code means before running payroll can use a tax code checker to read the letters and numbers correctly.

Student loans at the point of hire

Student and postgraduate loan deductions are part of the new starter process, not an afterthought. The employer asks every new employee whether they have a student loan or a postgraduate loan, and starts deductions where the P45 or the starter checklist indicates that repayments should continue ^[14].

The plan type governs the threshold, and getting it wrong changes the deduction. Where the employee cannot confirm their plan, the safe approach is to deduct on the lowest-threshold plan until HMRC sends a start notice confirming the correct one, because that protects the employer from under-deducting ^[14]. A postgraduate loan can run at the same time as a plan-type loan, so an employee may have two deductions at once. Crucially, an employer must never stop student loan deductions on the employee's word alone; only an official stop notice from HMRC ends them ^[14]. The mechanics of the five plans are covered in the guide to student loan deductions.

Workplace pension auto-enrolment duties

Every new employee has to be assessed for automatic enrolment into a workplace pension, and the assessment happens from the first payday, not at some later review ^[11]. The category the employee falls into determines what the employer must do and what it must tell the employee.

An eligible jobholder, broadly a worker aged between 22 and State Pension age earning above the earnings trigger of £10,000 a year, must be automatically enrolled into a qualifying scheme ^[11]. The minimum total contribution is 8% of qualifying earnings, of which the employer must fund at least 3%, and the employer cannot reduce pay or other benefits to cover its share ^[11]. Workers who do not meet the eligible test still have rights to opt in, so the assessment has to be run and recorded for everyone, which is why the duty is best handled inside payroll rather than as a manual side task. The full mechanics sit in the guide to auto-enrolment for employers.

Setting up the employee in payroll and the first FPS

With the legal checks done and the tax details collected, the final block is operational: entering the employee into the payroll system and reporting them to HMRC.

The payroll ID rule

Each employee needs a payroll ID that is unique within the PAYE scheme ^[10]. Reusing an old ID for a returning employee creates a duplicate record at HMRC and produces reconciliation errors, so a rehire in the same tax year gets a fresh payroll ID with the year-to-date figures reset to zero. A person holding two separate roles with the same employer needs a different payroll ID for each.

Getting the payroll ID right at setup avoids a class of problems that are painful to unpick later, because HMRC matches everything it receives to that identifier ^[10]. Accountants running onboarding across many client schemes typically rely on a multi-client payroll dashboard to keep payroll IDs consistent and unique per scheme.

Reporting on or before the first payday

The new employee is reported to HMRC through the first Full Payment Submission that includes them, and that FPS must be filed on or before the first payday ^[1]. The submission carries the collected details, the tax code and starter declaration, and the pay and deductions from the start of employment with this employer only. The year-to-date figures from a previous employer are never added into this employer's FPS ^[10].

Software that holds the HMRC Recognised badge builds and files this FPS automatically, dates it correctly and validates the new starter data before submission, which keeps the employer inside the reporting deadline on the first run ^[10]. HR platforms that embed payroll can drive the same reporting through an HMRC-recognised payroll API without their users leaving the host product.

Check a new starter's take-home pay before the first payslip

Before the first payday, an employer can confirm the numbers add up by running the salary through the Moonworkers UK salary calculator, which applies the current PAYE and National Insurance rules to the agreed gross pay.

The complete new employee checklist

The steps above condense into a single ordered checklist. An employer can run this for every hire, ticking each item before moving to the next.

Conclusion

The UK onboarding process rewards order. The two checks that gate everything else, the right to work check and, for a first-time employer, PAYE registration, have to happen before the start date, because both carry hard deadlines and real penalties. The remaining steps, from the written statement to the first FPS, then follow a clean sequence that ends with the employee correctly reported and correctly taxed.

What ties the checklist together is that most of it is payroll data. The tax code, the starter declaration, the student loan plan, the auto-enrolment category and the FPS all live in the same system, and the more of the checklist that system handles automatically, the smaller the employer's manual burden becomes. As onboarding moves further inside payroll and HR software, the employer's job narrows to gathering the right information once and checking that the automated output is correct.

Frequently asked questions

What must a UK employer do before a new employee starts work?

Two things are strictly pre-employment. The employer must complete a right to work check confirming the person can legally work in the UK, keeping evidence for the duration of employment plus two years, and a first-time employer must register a PAYE scheme with HMRC. Both have deadlines and penalties, so they cannot be left until after the start date.

What happens if a new employee does not have a P45?

The employer uses the starter checklist, which replaced the P46, to collect the same information the P45 would have carried. The checklist establishes the starter declaration (A, B or C), which sets the starting tax code. The employee gives the completed checklist to the employer rather than sending it to HMRC, and the employer uses it to complete the first Full Payment Submission.

When must an employer tell HMRC about a new employee?

On or before the employee's first payday. HMRC is told through the first Full Payment Submission that includes the new starter, which carries their tax code, starter declaration and the pay and deductions from the start of employment with this employer. Reporting after the first payday risks a PAYE late-filing penalty.

Does a new employee have to be enrolled in a pension straight away?

Every new employee must be assessed for automatic enrolment from their first payday. A worker aged between 22 and State Pension age earning above the £10,000 earnings trigger is an eligible jobholder and must be automatically enrolled into a qualifying scheme, with a minimum total contribution of 8% of qualifying earnings and at least 3% from the employer. Workers outside that definition still have rights to opt in, so every new starter has to be assessed and the outcome recorded.