Setting up and running payroll

Here's how to set up your monthly payroll so you can report PAYE information to HMRC in real time.

To set up payroll, you will need full access to FreeAgent. First, you will need to set up payroll profiles for any users in your FreeAgent account that will be part of your payroll. If you have other employees you can add new users to your account to include them in your payroll.

Once you've set up payroll profiles for all of your employees, you'll be able to prepare and run each month's payroll in FreeAgent. This includes the automatic submission of your PAYE information in real time (RTI) to HMRC once you've entered your Government Gateway login details.

Follow our step by step guide to get started or learn more about how FreeAgent supports RTI.

1 Company Details

Before you get started with payroll make sure your PAYE, Accounts Office and business tax references are correctly entered under Company Details.

2 Create payroll profiles

Payroll Profiles contain all of the information about an individual's monthly pay, deductions, pension contributions and the starting/leaving dates required to file your payroll online with HMRC.

From the My Money menu choose Payroll, then select the relevant tax year.

To set up a payroll profile, choose ‘Create Payroll Profile’ and select an employee from the list. If the employee’s name does not appear in the drop-down menu, make sure you have added them as a user.

If a payroll profile has already been set up for the employee, you can navigate straight to a summary of their payslips by choosing their name from the drop-down menu next to the tax year selection.

If you're a company director, and the company pays you a salary, you also need to set up your own payroll profile.


Complete the payroll profile for the employee using the following sections:

Employee Details

Enter personal details for the employee including their National Insurance Number. You only need to enter a Passport Number if you've collected this as part of any checks you've made as to whether the employee is entitled to work in the UK.

Some information will already have been filled in by FreeAgent because you've already entered it in the employee's user profile.

Partner's Details

Enter partner's details if the employee is claiming or planning to claim Additional Statutory Paternity Pay.

Employment Details

Select if this person is an existing employee or a new employee and then choose either 'director', 'director (alternative arrangements)' or 'employee' from the 'NICs calculated as' options.


National Insurance contributions are usually calculated as equal monthly payments. Directors have the option to choose to pay their National Insurance cumulatively, so that they pay less at the start of the tax year and more at the end. If you want to use this option for this individual, select the 'Director' option. Otherwise, choose 'Director (alternative arrangements)'. If they became a director during the current tax year, enter the directorship start date.

Employment details area of the payroll profile setup screen

If, at any stage, the employee becomes a director of the company, be careful about when you update this information in their payroll profile:

  • If the employee is due to be paid again before their directorship start date, don't update the 'NICs calculated as' options until the following month - but make sure you do so before you run that month's payroll.
  • If the employee is not due to be paid again until after their directorship start date, you should update the 'NICs calculated as' options straight away - make sure you do so before you run the current month's payroll.

Please note, if the directorship start date is before the company's FreeAgent start date and the director was previously an employee in the same tax year then please contact and we'll talk you through what to do.


For new employees, enter a start date and whether or not they are paid irregularly. You also need to select from the HMRC Starting Declaration options which provides information about any other work the employee has undertaken or benefits received during the current tax year.
Information about a new employee will be sent to HMRC as part of your next RTI submission after you create their payroll profile.

Select an option from Normal Weekly Hours to indicate how many hours a week the employee will work for the business. You can also add an optional unique employee number if you'd like HMRC to use this any correspondence with you.

Previous Pay This Tax Year

This is where you can enter pay to date that's not been run as part of your payroll in FreeAgent. You can move your RTI payroll to FreeAgent at any point during the year by using the year-to-date figures from your previous system. You also need to use this method if you've been entering payroll journals in FreeAgent for the first part of the tax year.

Tax & NI

Enter a tax code. You should have already received this from HMRC or will find it on the employee's P45.

Tax code should only be changed on receipt of a coding notice from HMRC. FreeAgent can handle BR, D0 (D-zero), D1 (D-one), K prefixes (like K495) or L, M, N, P, S, T or Y suffixes.

Select a National Insurance Category Letter – this is also sometimes known as the National Insurance contribution letter and is the same as the NIC Table Letter shown on a P60.

If the employee should be making student loan payments, select yes from 'Are there applicable student loan deductions?' and choose the appropriate plan type.

Leaving Date

You don't need to add a leaving date when first setting up a payroll profile. This is where to add a leaving date if the employee leaves the company in the future.

Monthly Pay

Enter details of the employee's monthly/basic pay with any allowances or other payments.

Monthly Statutory Pay

Enter any other pay the employee is currently receiving such as paternity or maternity payments.

Monthly Deductions

Add any regular monthly deductions.

Monthly Pension Contributions

Add details of any employer or employee monthly pension contributions.

If you're not sure how to enter any of your monthly pay, deductions, or pension figures, please see our Pay and Deductions guide.

When you're ready, 'Create payroll profile' to save the new payroll profile.

Remember to create a profile for each of your employees before you prepare and file your monthly payroll.

3Prepare a monthly payroll

Once you've set up at least one payroll profile you'll be taken to the Payroll Dashboard when you navigate to My Money>Payroll.

payroll dashboard

The Payroll Dashboard highlights recent payroll activity, displays what actions you need to take and summarises useful data from the entire year. You will see the option to 'Prepare Month x Payroll'; this will take you to that month's payroll preview.

  • Choose a date for your pay period - This is the date that the company is going to pay its employees. HMRC requires that the RTI submission is made before or on this date.
  • Review and edit payslips to make any adjustments for the current month's payroll. Changes can be applied here to each individual's monthly pay, statutory pay, deductions, and pension contributions. Any changes made here will not affect your default payroll profile settings - to apply other changes to payslips you need to edit individual payroll profiles.
  • Double-check everything - Check that you’ve made any necessary changes to your payroll profiles such as adding employee leaving dates, making changes to tax codes or updating student loan settings. Also, make sure that you have a correct payslip here for each employee who is receiving a payment of salary this month.

When you've completed your checks select 'Run & Report Month x Payroll' to continue.

Deleting a monthly payroll

If at any time you want to completely start a monthly payroll again, select the 'Delete Payroll' option, which you'll see after you've selected 'Continue Month x Payroll'. This would delete that month's payroll including the generated payslips. You might want to do this to go back and make changes to individual payroll profiles before running your month's payroll again. You can't do this if you've already filed that month's payroll with HMRC.

Payroll filed through another system

If your payroll is not to be filed with HMRC through FreeAgent, perhaps because your accountant is filing it using his or her own system, then you can tick the 'Don't report month x payroll to HMRC' box under the 'Run & Report Month x Payroll' button.

Make sure that your payroll information has been filed using RTI through another system as RTI is now compulsory for all businesses. FreeAgent gives you a warning of this when you tick the box.

You can mark the most recent month as unfiled if you need to make changes to it, but not earlier months.

4Submit your payroll to HMRC (RTI)

Once you select 'Run & Report Month x Payroll' you have effectively run your payroll, and payslips for the month have been created. You now need to submit your PAYE information to HMRC by entering your Government Gateway login details when prompted.

That's it! You've run and reported your monthly payroll.

Reviewing payslips

Once you’ve run each payroll, you can review the payslips that were issued by selecting the month from the drop-down menu.

select month from drop-down box

This will take you to a summary of all the payslips that were issued that month. To see a particular employee’s payslip for that month, choose ‘View Payslip’ next to the employee’s name.

select view payslip from table

To view a summary of the employee’s payslips for the entire tax year, select the employee’s name from the table.

select employee name from table

You can also access this summary page directly by selecting the employee’s name from the drop-down menu.

select employee name from drop-down box

Correcting mistakes

If you have level 8 access to FreeAgent and you find that your company has made a mistake in a payroll submission within the current tax year, you can edit the payslip(s) in question by following these steps:

1. View the payslip you need to correct

Navigate to ‘My Money’ and ‘Payroll’. Select the appropriate payroll month from the list in the ‘Payroll’ area.

Next, choose the ‘View payslip’ button that appears alongside the details of the employee whose payslip you need to edit. To edit more than one payslip, please follow this process separately for each employee.


From the view of the employee’s payslip, you will see an ‘Edit payslip’ button.


Please note that the ‘Edit payslip’ feature won’t be available if you are trying to correct any of the following:

  • a month 12 payslip
  • a historical payslip of an employee who has a leaving date entered into their payroll profile
  • a payslip for a historical tax year

If you need to correct any of these types of payslip, please email for assistance.

2. Edit the payslip

Select the ‘Edit payslip’ button and then correct the required fields on the payslip. Select ‘Save changes’ when you’ve finished.


The employee’s payslip for that month will automatically be updated on the screen. You can select the ‘Save as PDF’ button to save and then share the updated payslip with the employee.

Correcting a payslip in this way will update the company’s year-to-date figures in FreeAgent immediately, but please note that HMRC won’t receive the updated information until the following month’s payroll submission.

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