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As an employer you're required to keep records of pay, tax and National Insurance contributions (NICs). For each employee that you make a payment to during the tax year, you have to prepare and maintain a form P11 or equivalent payroll record (either electronic or paper) if their earnings are above a certain level or if you're required to operate a tax code for them.
The easiest and most convenient method for keeping these records and working out pay and deductions is to use commercial payroll software (some of which is free) or HM Revenue & Customs' (HMRC's) free P11 Calculator - which is part of the Basic PAYE Tools package. These do most or all of the calculations you need automatically. They will also make it easier and quicker for you to file your starter and leaver information (forms P45 and P46) and your Employer Annual Return (form P35 and forms P14) online which is now a requirement for almost all employers.
Alternatively, you can use a paper version of form P11 that you can download from the HMRC website but this is more time consuming and less convenient when it comes to filing online.
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By law you have to keep records of all payments to and deductions from your employees. For each employee you must record:
You must record this information on a separate form P11 or equivalent payroll record (either electronic or paper) for each employee if any of the following apply:
The details you enter on the P11 or equivalent payroll record are used to work out how much you need to pay to HMRC each month or quarter for PAYE tax, NICs and student loan deductions. (In certain circumstances your P11 calculations may require a tax refund to an employee for a month or quarter. For details of the procedures to follow, use the link below.)
The P11 figures also provide the information that you'll need at the end of the year to complete your Employer Annual Return (P35 and P14s).
If you don't need to fill in form P11 for an employee - for example because they don't earn enough - you'll still need to keep a record of the employee's name and address and the payments you make to them for each pay period.
Taking on a new employee - learn more
Dealing with employee tax refunds
You'll need the following to set up and maintain an employee's form P11 or equivalent record.
You'll need:
To find out what to do if your employee doesn't have a National Insurance number or tax code, read the guide 'Taking on a new employee - first steps'.
Getting these details right the first time will save you time by reducing the number of employee queries. Wherever possible, check the information with a trusted official source such as a birth certificate or passport.
If you're a new employer and are required to complete a form P11 for an employee for the first time, you'll need to register with HMRC for PAYE. Read the guide 'How to register as an employer' to find out more..
Taking on a new employee - first steps
How to register as an employer
Using software to maintain your employees' payroll records saves you time and helps reduce error. It also makes it easier and quicker for you to file your starter and leaver information and your Employer Annual Return online - which almost all employers are required to do. You can choose between commercial payroll software and HMRC's downloadable P11 Calculator.
There are many software packages available that offer a full payroll service, including the production of payslips and so on. Once you've input an employee's details these packages will automatically work out all your deductions and amounts to pay. They also allow seamless online filing of PAYE forms, including your Employer Annual Return. Find out more by reading our related guidance on choosing a payroll system.
HMRC’s free P11 Calculator - which is part of the Basic PAYE Tools package - is available to download from the Business Link website. It isn't a full payroll software system but it's more than a simple calculator. You can use it in conjunction with HMRC’s Statutory Payment Calculators to keep a running total of your employees' pay and deductions. It also comes with updates that adjust your figures to take account of changes to tax codes.
Employers with up to and including nine employees at the end of the tax year (5 April) can file the Employer Annual Return online automatically from the P11 Calculator (If you have more than nine employees you can use figures from the P11 Calculator to file your return online using HMRC's 'Online Return and Forms - PAYE' service or using paper forms). Remember that almost all employers are required to file their Employer Annual Return online.
You can also use it to file your in-year starter and leaver information (P45s and P46s) online.
To read more detail about the options for keeping electronic payroll records and about online filing, follow the links below.
A set of Basic PAYE Tools are now available to download straight to your computer. In addition to the P11 calculator, the tools include:
Using commercial payroll software or HMRC's downloadable P11 Calculator
Employer deadlines for filing PAYE online
Understanding and using PAYE Online for employers
Download Basic PAYE Tools from the Business Link website (Opens new window)
If using paper methods, you can download a form P11 using the link below. There are then two ways that you can calculate the figures you'll need. You can:
However, bear in mind that if you keep paper P11s you must still file your starter and leaver information and Employer Annual Return online, unless you are one of the few employers who are exempt from this requirement.
Download Basic PAYE Tools from the Business Link website (Opens new window)
If you're not required to complete a form P11 (see the earlier guidance for when this applies) bear in mind that you still need to keep a record of your employee's name and address and the amount of wages paid in each pay period.
If you provide your employees with taxable benefits and expenses you'll need to complete separate forms and keep separate records of these - most of this paperwork is completed at the end of the tax year, but you need to tell HMRC about certain company car benefit changes during the tax year. Read the detail in the 'Expenses and benefits' section.
Expenses and benefits - find out more
Improving the operation of PAYE: Real Time Information (RTI)
Finalising your payroll at the end of the tax year
Filing your Employer Annual Return: P35 and P14s
File your PAYE in-year forms: P45, P46, etc
Download Employer Helpbook E13, 'Day-to-day payroll' (PDF 413K)
PAYE/National Insurance payments and deadlines
Marginal items of pay - when to include them in your payroll calculations (PDF 24K)
