Getting your payroll ready for its first PAYE submission can feel like standing at the edge of a cliff — one small slip and HMRC will certainly let you know. I’ve run payroll setups for dozens of small businesses, and the difference between a smooth first Full Payment Submission (FPS) and a stressful scramble usually comes down to a few practical checks. Below I share the exact items I always run through before clicking “send”. Use this as a pre-submission checklist to catch the usual pitfalls and save yourself time (and phone calls to HMRC) later.
Confirm your PAYE scheme and HMRC details
First things first: make sure you have a registered PAYE scheme and the correct employer PAYE reference. If you haven’t set up PAYE with HMRC, you need to do that and wait for your Accounts Office reference and Employer PAYE reference to arrive. If you’re using payroll software (Xero, QuickBooks Payroll, Sage, BrightPay, etc.), enter the exact reference numbers — a single digit error will cause the FPS to be rejected.
Also check the Government Gateway or HMRC online account details you’ll use to submit RTI. For submission via payroll software, ensure the software is authorised to interact with HMRC for that scheme: this is often a one-time authorisation (agent or employer) step.
Verify employee starter and right-to-work details
Employees' identities, start dates and National Insurance numbers must be correct. Common starter-record mistakes are:
I always get copies of ID and a signed Starter Checklist (or a P45 if they have one). If an employee provides a P45, you’ll need the previous employer’s pay and tax figures to set their tax code correctly. If they don’t provide a P45, make sure they complete a New Starter Checklist so you can apply the correct tax code (BR, NT, or an emergency code, if appropriate).
Check tax codes and National Insurance categories
Tax codes and NI category letters (A, B, V, C, etc.) are frequent sources of mistakes. For starters:
Getting these wrong can lead to incorrect deductions and an awkward end-of-year reconciliation.
Map pay elements and deductions accurately
Before your first payroll run, map out every pay element so your software treats them correctly. Common pay elements include:
Make sure each element is set as taxable or non-taxable correctly, and that pension contributions and salary-sacrifice arrangements are configured if you offer them. If you use auto-enrolment, confirm employee contribution bands and employer matching are set in line with your workplace pension scheme.
Set up PAYE allowances, pension and student loan deductions
Auto-enrolment is one of those payroll areas that generates queries if it isn’t set correctly from day one. Double-check:
If you’re outsourcing pension calculations to a payroll provider, confirm data passes securely and that contributions will be paid to the pension provider on time.
Decide on FPS or EPS and submission timing
Your first RTI submission will usually be an FPS to report payments and deductions for the pay period. However, if you’re not paying anyone in a tax month but need to report something (such as statutory payments recovery or Employment Allowance claims), you’ll use an EPS. Know which one you should send.
Also check your payment dates vs. reporting dates. The FPS must be filed on or before your employees’ payday (or by the employees’ payday if filing after the pay run). Late or incorrect submissions can trigger penalties.
Payment method and bank details for HMRC
Confirm how you’ll pay PAYE liabilities to HMRC (online bank transfer, Direct Debit, or other methods) and that the bank details and dates are set in your cashflow plan. If you’re claiming Employment Allowance, ensure it’s correctly claimed on the EPS; claiming incorrectly can lead to an HMRC enquiry.
Make sure payroll software settings match your accounting setup
If you post payroll journals into your accounts, check account mappings for wages, PAYE liabilities, employer NIC, pension contributions, and net pay. I recommend testing a sample run and exporting the payroll journal to your accounting package (Xero, QuickBooks, Sage) to confirm the figures reconcile.
Prepare for statutory forms and year-end reporting
Even at the first run, think ahead: you’ll need to issue payslips and keep payroll records for at least three years (usually longer for tax). Make sure your software can produce:
It’s easier to set these up correctly from the start than to fix them later.
Common mistakes, why they happen and quick fixes
| Problem | Why it happens | Quick fix |
|---|---|---|
| Wrong or missing NI numbers | Employee forgets or typo when entering | Verify against original ID; ask employee to confirm and update before FPS |
| Incorrect tax codes | No P45 or delayed HMRC coding | Use emergency code initially and update when HMRC sends the correct code |
| Pension contributions applied incorrectly | Auto-enrolment rules misinterpreted | Re-check eligibility and contribution bands in pension setup; run a test payroll |
| FPS rejected by HMRC | Wrong PAYE reference or Gateway auth missing | Confirm PAYE reference and re-authorise software with HMRC |
Final pre-submission checklist I use
If you follow these checks, your first PAYE submission should be straightforward. If something looks odd during the test run, stop and correct it — a little extra time now will save far more time later when HMRC or an employee queries a payslip. If you’d like, I can provide a blank starter checklist and a simple spreadsheet template that I give to clients when onboarding new employees — it speeds this whole process up considerably.
