How to pay your team before PAYE registration?

We recommend registering for PAYE 6 weeks before you need to pay anyone on payroll. The ideal is always that you're registered for UK Payroll (PAYE) and that you can make submissions to HMRC using official payroll. However, PAYE registration can take up to 10 weeks in some cases, and sometimes you just need to pay your team. In these cases, there are 2 common approaches that we see:

1. Pay as contractors - Here a contractor/person would send you an invoice for their services and you pay the full amount to them. They will be responsible for reporting this income on their year end self-assessment, but it means you can pay their invoice in full when it is issued. This assumes you have under £10M in revenue and £5M in assets, which is pretty likely we figure.
2. Net Pay today & file PAYE late - An alternative approach is that you pay a 'hypothesised' Net amount of Pay. Gross Pay is the quoted annual salary that someone earns. Then Income Tax, National Insurance & things like Student Loan or Pension contributions are removed leaving the 'Net' amount that you actually pay someone. You could use a calculator based on their Gross to pay to guesstimate their Net Pay. You would pay the Net amount to the employee, and save the remainder to pay PAYE taxes when you do file to HMRC after your registration. The only caveat is that the Net Pay can vary depending on your employee's tax code, pension & student loan so this is at best a guesstimate. Usually, it's probably best to be generous with this guesstimate to avoid short-changing your team, or to wait for your PAYE registration to come through to get the exact numbers right. If you were to use this method, you could use this calculator here.