Staying on top of employee taxes is essential for any UK employer. HMRC can charge penalties for late filings, incorrect PAYE reports, and missing paperwork. For women running growing businesses, the admin can feel overwhelming, especially when you are balancing client work, cash flow, and team management. A clear process keeps you compliant, protects your reputation, and makes sure your team is paid correctly. This guide sets out what you must do for the 2026/27 tax year.

Register with HMRC before you pay anyone

You cannot pay an employee through PAYE until you are registered as an employer. HMRC guidance for 2026/27 states you must register before your first payday, and it can take up to five working days to receive your employer PAYE reference number. You will need this reference for every Real Time Information (RTI) submission. For women founders moving from sole trader to employer, this is the first formal step that turns your business into a genuine workplace. If you are also taking on contractors, check whether the Employment Rights Act employer timeline affects your obligations.

Use HMRC-recognised payroll software

RTI means you must report pay, tax, and National Insurance to HMRC on or before each payday. Most employers use HMRC-recognised payroll software to send the Full Payment Submission (FPS). Free options are available for businesses with fewer than 10 employees, but paid software often handles auto-enrolment pension calculations and year-end forms automatically. For women founders who are hiring for the first time, choosing software early prevents a last-minute scramble before payday and reduces the risk of an FPS penalty.

Check tax codes at the start of the tax year

The standard tax code for 2026/27 is 1257L, according to HMRC. The number shows how much an employee can earn tax-free before PAYE kicks in; 1257 means £12,570, which is the personal allowance frozen by HM Treasury until 2027/28. The letter tells you how the remaining income is taxed. Common codes include:

• L – standard tax-free personal allowance
• M – receives Marriage Allowance transfer
• N – has transferred Marriage Allowance to a partner
• BR – all income taxed at the basic rate of 20%
• D0 – all income taxed at the higher rate of 40%

For new starters, use the P45 if they have one. If not, ask them to complete the HMRC starter checklist so you can assign the right code. HMRC may update codes during the year; always apply the latest code notice promptly. Getting tax codes wrong is one of the most common payroll mistakes for first-time women employers, and it can leave your employee overpaying or underpaying tax. You can check the meaning of each letter on the gov.uk employee tax codes page.

Understand employee taxes and National Insurance rates

For 2026/27, income tax bands in England, Wales, and Northern Ireland remain frozen, HMRC confirmed in its 2026/27 guidance. Employees pay 20% basic rate on earnings between £12,570 and £50,270, 40% higher rate between £50,271 and £125,140, and 45% additional rate above £125,140. The Scottish Government sets its own bands for Scottish taxpayers.

National Insurance also affects your costs. For 2026/27, employer Class 1 National Insurance contributions are 15% on earnings above the secondary threshold of £5,000 a year, HMRC says. The Employment Allowance is £10,500 for 2026/27, which can reduce your employer NICs bill if your total employer NICs were below £100,000 in the previous tax year, according to HMRC. Because employer NICs are a direct cost on top of wages, they affect hiring decisions for women-led businesses that are scaling carefully. Check your eligibility on gov.uk PAYE for employers, because the rules differ for companies where the director is the only employee.

Keep payroll records for three years

HMRC requires you to keep payroll records for three years from the end of the tax year they relate to, according to its 2026/27 employer guidance. Store securely:

• Employee pay and deductions, including tax and National Insurance
• Leave, sickness, and maternity or paternity pay records
• Tax code notices from HMRC
• Taxable expenses and benefits, such as company cars or private medical insurance
• P45s, P60s, and P11D forms

Digital records are fine, but they must be accurate, complete, and readable. If HMRC opens an enquiry, you will need to produce them quickly. Good record-keeping is especially valuable for women-led businesses that may face funding or due diligence checks, because tidy payroll files show you run a disciplined operation.

Hit the annual reporting deadlines

The tax year ends on 5 April. Your year-end checklist should include:

• Send your final FPS on or before your employees’ last payday of the tax year
• Update payroll software with the new tax year settings
• Update employee records with the correct 2026/27 tax codes
• Give each employee their P60 by 31 May 2027
• Submit P11D and P11D(b) forms for expenses and benefits by 6 July 2027
• Pay Class 1A National Insurance on benefits by 22 July 2027 (19 July if posting a cheque)

Missing these deadlines can damage the credibility you have built with investors, lenders, and clients, so diarise them as soon as the tax year begins.

Handle expenses and benefits correctly

Some employee benefits are taxable and must be reported on a P11D or through payrolling benefits. Common examples include company cars, private health cover, interest-free loans over £10,000, and gym memberships. If you payroll benefits, you must register with HMRC before the start of the tax year. Getting this wrong can lead to penalties and unexpected tax bills for both you and your employees. This is an area where growing women-led businesses often need extra care, because benefits packages can become complex as you scale your team.

When to get professional help

If your payroll is growing, you are taking on your first employee, or you are unsure about off-payroll working rules, an accountant or payroll bureau can save you money and stress. Many women founders find that outsourcing payroll frees them to focus on revenue-generating work. See our guide on why hire an accountant for your UK business in 2026.

Your payroll action plan

1. Register as an employer with HMRC before your first payday.
2. Choose HMRC-recognised payroll software and send FPS reports on time.
3. Check every employee’s tax code at the start of 2026/27 and update records when HMRC sends a notice.
4. Keep payroll records for at least three years.
5. Diarise P60 (31 May), P11D (6 July), and Class 1A NIC payment (22 July) deadlines.
6. Review whether the £10,500 Employment Allowance cuts your employer NICs bill.

Staying on top of employee taxes is not just about avoiding penalties. It protects your cash flow, keeps your team confident in their payslips, and gives you a clear picture of your labour costs as you scale.