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How to process a new starter in UK payroll: Tax codes, National Insurance and First Payslip
Hiring a new employee involves more than adding their details to your payroll. You need to collect the right information, determine the appropriate tax code and starter declaration, check National Insurance and loan deductions, assess workplace pension duties, and report the employee to HMRC.
This guide explains how to process a new starter through UK payroll, from collecting their information to checking their first payslip.
What information do you need from a new starter?
You need to collect certain information from your employee to set them up with the correct tax code and starter declaration in your payroll software. You'll usually get most of this information from their P45. If they do not have a P45, they may need to complete a starter checklist.
You'll need your employee's:
Date of birth
Gender
Full address
Start date
From their P45, you'll need their:
Full name
Leaving date from their last job
Total pay and tax paid to date for the current tax year
Student loan deduction status
National Insurance number
Existing tax code
You must keep this information in your payroll records for the current year and the following three tax years.
Step 1: Check whether the employee has a P45
Ask the new starter to provide their P45 if they have one. If the employee provides a paper P45, they should give Parts 2 and 3 to their new employer and keep Part 1A.
What if the employee does not have a P45?
Ask your employee to complete a starter checklist if they do not have a P45, or if they left their last job before 6 April 2025.
The new employer will use the information in the checklist to:
Add the employee to their payroll system
Work out the tax code to use on their first pay
Work out how much Income Tax to deduct
Work out any student or postgraduate loan deductions
Tell HMRC that the employee has started working for them
If the employee has already received their first pay, they should not use the starter checklist. They can use HMRC's Check your Income Tax online service to check their tax code and update their details if they're wrong.
Step 2: Determine the correct tax code
The tax code tells your payroll software how much Income Tax to deduct from the employee's pay.
Once you have the employee's information, use HMRC's tax code and starter declaration guidance to determine the appropriate tax code and starter declaration. You can also use the guidance to find out what else you need to do before paying your employee for the first time.
You must report the tax code and starter declaration to HMRC through a Full Payment Submission (FPS) on or before the employee's first payday.
Step 3: Check the employee's National Insurance details
Employers use an employee's National Insurance category letter to work out how much National Insurance they and the employee need to contribute. Most employees have category letter A.
If your new employee does not know their National Insurance number and you have not yet included them on an FPS, ask whether they have an old payslip or P60 that shows it.
If you cannot obtain a National Insurance number for a new employee, you must still include their details on the first FPS that includes a payment to them. Leave the National Insurance number field blank. Do not use an incorrect or dummy National Insurance number. When you submit the FPS, HMRC will try to match the employee's details to their National Insurance number.
Step 4: Check for student or postgraduate loan deductions
You should make student loan deductions if any of the following apply:
Your new employee's P45 shows that deductions should continue.
Your new employee tells you they're repaying a student loan or a postgraduate loan, for example, on a starter checklist.
HMRC sends you form SL1 or form PGL1 and your employee earns over the income threshold for their loan.
Ask your new employee if they have a student loan or a postgraduate loan. They may have both.
If your employee has a student loan, ask them to sign in to their repayment account and check which plan to use for deductions. If they cannot tell you which plan they have, use Plan 5 in your payroll software until you receive a student loan start notice (SL1). If your employee has more than one student loan plan and you do not know which one is in repayment, start deductions for the plan with the lowest recovery threshold until you receive an SL1.
You can deduct only one student loan plan type at a time. However, you can deduct a postgraduate loan at the same time as a student loan.
HMRC will tell you if you need to stop making loan deductions from your employee's pay. They'll send you form SL2 for student loans or form PGL2 for postgraduate loans. Do not stop making deductions just because an employee asks you to.
Step 5: Register the new starter with HMRC
Register your new employee with HMRC by including their details on a Full Payment Submission (FPS) on or before their first payday.
On this FPS, include:
The employee information required for the submission
The tax code and starter declaration you've determined
Pay and deductions, such as Income Tax, National Insurance, and student loan deductions, from the date they started working for you
Do not include pay or deduction figures from their previous job in your new employer's FPS.
Step 6: Check workplace pension duties
When a new employee joins, check whether they need to be assessed for automatic enrolment into your workplace pension scheme. Their age, earnings, and existing pension arrangements can affect what you need to do as an employer.
If you're employing someone for the first time, use The Pensions Regulator's tool to understand your automatic enrolment duties and set up a qualifying workplace pension scheme if required. If you already employ people, continue to assess eligible employees and meet your ongoing workplace pension duties, including making the required pension contributions and providing the appropriate information to employees.
Make sure you complete any required pension assessment and enrolment steps within the relevant time limits. Your payroll process should also account for pension deductions when calculating the employee's pay.
For detailed guidance on automatic enrolment and your ongoing responsibilities, refer to The Pensions Regulator's latest employer guidance.
Step 7: Give the employee their first payslip
You must give your employees and workers a payslip on or before their payday.
Payslips must show:
Pay before any deductions (gross wages)
Deductions such as Income Tax and National Insurance
Pay after deductions (net wages)
The number of hours worked, if the pay varies depending on time worked
Payslips can also include information such as your employee's National Insurance number and tax code, their rate of pay, and the total amount of pay and deductions so far in the tax year.
You may be able to produce payslips using your payroll software. You can either print payslips to give to your employees or send them electronically.
What if the P45 or starter checklist arrives late?
You may need to update your payroll records if your employee gives you a P45 or starter checklist after you've registered them with HMRC.
If HMRC has sent you a tax code
Use the tax code HMRC has sent you if your employee gives you a P45 or starter checklist after you've first paid them. Deduct any student loan repayments from the date your employee started with you.
If HMRC has not sent you a tax code
Late P45: Use your employee's P45 to work out their tax code and update their details in your payroll software. If your employee left their last job after 5 April 2025, you should also update both the Total pay to date and Total tax to date fields in your payroll software. Do this for the first week you included this information. If your software finds errors, correct them using the appropriate figures.
Late starter checklist: Use your employee's starter checklist to update the starter declaration in your payroll records. Keep using the tax code you used in your first FPS until HMRC sends you a new one.
How Zoho Payroll helps you process new starters
Setting up a new employee involves several payroll details that need to work together. Zoho Payroll helps UK employers manage these details within their payroll workflow.
You can add employees to your payroll, maintain their payroll information, configure applicable deductions, and process their pay from the same system. You can also manage employee payslips and give employees access to their payroll information through the employee self-service portal.
With Zoho Payroll, payroll teams can manage the steps involved in moving from employee onboarding to the first payroll run in one place.
Frequently Asked Questions
What is a new starter in UK payroll?
A new starter is an employee who has joined your organisation and needs to be added to your payroll. Processing a new starter involves collecting their information, determining their tax code and starter declaration, checking National Insurance and loan deductions, and reporting their details to HMRC.
Do all new employees need to complete a starter checklist?
No. If an employee provides a valid P45, you can use the information on it to set them up in payroll. A starter checklist is generally needed if they do not have a P45 or if they left their last job before 6 April 2025.
What happens if a new starter does not have a P45?
Ask the employee to complete a starter checklist. Use the information provided to determine the appropriate tax code and starter declaration, and to set up the employee in your payroll software.
When should a new starter be reported to HMRC?
You should report a new starter by including their details in a Full Payment Submission (FPS) on or before the first payday on which you pay them.
Can I process a new starter without their National Insurance number?
Yes. If you cannot obtain the employee's National Insurance number, you must still include their details on the first FPS that includes a payment to them. Leave the National Insurance number field blank and do not use a dummy number.
How do I know which student loan plan to use for a new employee?
Check the employee's P45 or starter information for their student loan details. If the employee cannot tell you which plan they have, use Plan 5 until you receive a student loan start notice (SL1). If they have more than one student loan plan and you do not know which one is in repayment, use the plan with the lowest recovery threshold until you receive an SL1. A postgraduate loan can be deducted at the same time as a student loan.
What should I do if a new starter gives me their P45 after their first payday?
If HMRC has already sent you a tax code, use that code. If HMRC has not sent a tax code, use the P45 to work out the employee's tax code and update your payroll records. You may also need to update their year-to-date pay and tax details, depending on when they left their previous job.
When should a new employee receive their first payslip?
You must give your employee or worker a payslip on or before their payday. The payslip must show their gross pay, deductions, net pay, and the number of hours worked if their pay varies according to hours worked.
Note : New starter payroll requirements can change. Always check the latest HMRC guidance before setting up a new employee on your payroll.
For the most up-to-date guidance, refer to the GOV.UK New Employee guidance.