Running payroll internally can seem daunting for a new business owner, but HM Revenue and Customs (HMRC) provides a free software solution designed specifically for micro-businesses. HMRC’s Basic PAYE Tools (BPT) allows employers with fewer than 10 employees to manage tax calculations, submit national insurance documentation, and report salary events directly to government systems without paying for commercial software subscriptions.
This article outlines how to download, configure, and operate Basic PAYE Tools to keep your small business compliant with modern Real Time Information (RTI) regulations. Phase 1: Prerequisites and Initial Setup
Before downloading the software tool, your business must establish its legal status as an employer with the proper government accounts.
Register as an Employer: You must register for PAYE Online with HMRC before running calculations. This process can take up to 15 days to generate your official Employer PAYE Reference Number and Accounts Office Reference Number.
Download the BPT Software: Visit the Official GOV.UK Basic PAYE Tools User Guide to download the correct software version for your operating system (Windows, macOS, or Linux).
Activate the System: Open the application, input your business name, enter both reference numbers received from HMRC, and type in your government gateway login credentials. This safely links your offline computer software to your online tax account. Phase 2: Adding Employer and Employee Data
With the core system active, you must configure individual records for every worker on your payroll. How to use Basic PAYE Tools – GOV.UK
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