Free Downloadable Payroll Checklist for Small Businesses
Get to grips with payroll admin, plus download FSB's free Payroll Checklist & Calendar covering every task and deadline across the tax year.
Hiring employees is an exciting step in growing your small business, but payroll can be time-consuming and confusing. There’s more to payroll than simply paying your staff. You’ll need to account for each employee’s deductions, operate PAYE and ensure you’re compliant with pension contributions.
At the Federation of Small Businesses, our payroll specialists from FSB Payroll and Pensions are here to help you get started with managing payroll as a small business, so you can get back to managing your team.
To help you put this into practice, FSB has built a ready-to-use spreadsheet with two tools: a Payroll Checklist covering every stage from setting up a new employee to when they leave, and a Payroll Calendar mapping out the key deadlines across the tax year, including the 22nd-of-the-month PAYE payment, P60s, and P11D reporting. Both come with a progress tracker built in.
Payroll compliance isn't a single task, it's a set of steps you need to get right every time you hire someone, every time you pay someone, and every time someone leaves. Missing one, like forgetting to register an employee with HMRC or skipping a final P45, can cause real problems down the line.
FSB's Payroll Checklist breaks this into four sections: New Employer Setup, Every Payday, When an Employee Leaves, and Records to Keep, 30 tasks in total, pulled directly from HMRC's own requirements. Mark each one Yes or No as you go, and the progress tracker at the top updates automatically, so you always know exactly how much of the process is done.
What do you need to do when you hire an employee?
Whether you’re recruiting your first employee or growing your team, there is a checklist you need to follow for every person you employ. You need to follow these steps to stay compliant with payroll.
Get a PAYE online login
Set up a Pay As You Earn (PAYE) payroll scheme (a payroll provider can also do this for you)
Set up payroll software
Ask your employee for information to work out their tax code (A P45 or HMRC’s starter checklist)
Request their National Insurance number
Register your employee with HMRC using a Full Payment Submission
Register with the Construction Industry Scheme if you’re paying subcontractors
Don’t forget, there are other responsibilities you’ll need to remember as an employer, for example, employer’s liability insurance and creating the correct documents such as employment contracts.
Every one of these steps is built into the New Employer Setup section of FSB's Payroll Checklist, so you can tick each one off as you go rather than working from memory.
What is PAYE?
You need to operate PAYE in your payroll, which HMRC uses to collect income tax and National Insurance from your employees through deductions. Other deductions you may need to make include student loan repayments or pension contributions.
When do you need to pay this?
Monthly payments: 22nd of the following tax month
Quarterly payments: 22nd after the end of the quarter
What do you need to do?
On or before payday
Record the employee’s pay
Calculate any deductions like income tax and National Insurance
Work out how much employer’s National Insurance you’ll need to pay
Produce and distribute payslips
Report pay and deductions in a Full Payment Submission to HMRC
Whilst you’ll have a weekly or monthly routine for payroll, there are also annual duties that you’ll need to carry out. From sending your final payroll report to updating tax codes and issuing P60s, make sure you don’t miss any tasks with our checklist for the start of the tax year.
All employers must report their PAYE information to HMRC in real time. This is known as Real Time Information (RTI). RTI means that you must report to HMRC every time you pay an employee, at the time you pay them.
This exact list is the Every Payday section of FSB's Payroll Checklist, a quick way to make sure nothing gets missed on a routine you'll be repeating every pay period.
What employer contributions do you need to pay?
Employers’ Class 1 National Insurance contributions, rates, and thresholds for the 2024/25 tax year can be found on the government website
The Employment Allowance lets eligible employers reduce their National Insurance liability by up to £10,000 for the 2025/26 tax year.
What about workplace pensions?
You have a responsibility to ensure a compliant workplace pension is in place for all eligible employees, no matter how small your team. With auto-enrolment, triennial reviews and annual duties, there’s a lot to think about – and a lot of paperwork to deal with – but you risk fines from The Pensions Regulator if your scheme isn’t compliant.
Employing seasonal employees? Postponement allows you to delay auto enrolment of new starters or temporary staff joining you on a short-term basis. You can delay the process of assessing an employee for auto enrolment to your pension scheme for a maximum of three months.
FSB's Payroll Calendar maps these out across the full tax year in one place, from the 6 April reset through to P60s, P11D deadlines, and your triennial pension review, so you're not relying on a separate checklist for each one.
What payroll records do you need to keep?
Employee pay and deductions (tax, National Insurance, student loan repayments, pension contributions etc.)
Reports and payments made to HMRC
Employee leave and sickness absences
Tax code notices
Taxable expenses or benefits
Proof you have paid correct minimum wage
This list is built directly into the Records to Keep section of FSB's Payroll Checklist, with space to note where each record is stored and confirm it's up to date.
What do you need to do when an employee leaves?
You need to tell HMRC when an employee leaves your business.
Put the employee’s leaving date on their payroll record
Make deductions as normal when you send you next Full Payment Submission
Give the employee a P45
You’ll also need to:
Decide whether it’s best for your employee to work their notice period or offer payment in lieu
Arranging cover for the employee where necessary
Confirm their notice period
Handle any leftover contractual holiday that has been accrued
These records are important in the event of a PAYE compliance check, as HMRC may request to see your records up to three years after the tax year they relate to.
FSB's Payroll Checklist includes a dedicated When an Employee Leaves section covering all of this, so the process is consistent every time someone moves on.
Upcoming changes: Mandatory payrolling of benefits (P11D Reform)
HMRC will require all employers to report and collect tax and Class 1A National Insurance contributions (NIC) on most benefits in kind via payroll from 6 April 2027.
This date is flagged separately on FSB's Payroll Calendar, highlighted apart from your current annual deadlines, so you can plan ahead for 2027 without confusing it with what's due this year.
This replaces the longstanding system of submitting forms P11D and P11D(b) after year end. The reform aims to simplify and modernise the UK tax system. The original implementation date of April 2026 was postponed to April 2027 (announced 28 April 2025).
What counts as a benefit in kind?
A taxable benefit in kind (BIK) is any non‑cash reward provided to employees. Examples include cars, medical insurance, and certain expenses.
These remain taxable and subject to Class 1A NIC.
How payrolling will work (from April 2027)
Taxable benefits will be reported in real time through payroll.
Employers will calculate the annual value of each benefit and spread this across pay periods.
Taxes and Class 1A NIC will be deducted monthly through the FPS (Full Payment Submission).
P11Ds and P11D(b)s will no longer be required — with limited exceptions.
When will P11Ds still be needed?
Only in limited cases:
Employee loans (interest-free or low‑interest)
Employer‑provided accommodation
Employers may voluntarily payroll these benefits from 2027, but it will not be mandatory at this stage.
Impact on employers already payrolling voluntarily
Current voluntary payrolling collects income tax only; Class 1A NIC is still settled at year end.
From April 2027, Class 1A NIC will also be collected through payroll for payrolled benefits.
Only non‑payrolled loans and accommodation will still require a P11D(b).
Loans and accommodation will become eligible for voluntary payrolling from 2027
PAYE Settlement Agreements (PSAs)
No change.
Benefits reported under a PSA will continue to be taxed and NIC‑charged under existing rules (grossed‑up tax and Class 1B NIC).
Actions required by employers
1. Review payroll system capability
Ensure payroll software can support:
Benefit calculations
Real‑time reporting
Class 1A NIC processing during the year
2. Communicate with employees
Employees new to payrolled benefits must:
Check and update their PAYE codes to avoid double taxation
Understand the cashflow impact of tax deductions being spread across the year
3. Strengthen data accuracy and processes
Benefit data must be:
Correct
Timely
Fully integrated with payroll
Errors could impact employee net pay and incur penalties.
4. Reassess the benefit offering
With all benefits moving into real‑time reporting, now is an opportune time to review:
Structure
Value to employees
Administrative impact
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