Payday should be a checklist, not a scramble between spreadsheets, HMRC and an inbox of Word payslips. This guide is the full HydraTax payroll path — from the first employee to a password-protected pack in the client’s inbox.
1. Turn the client into an employer
Open the client and go to Payroll. If PAYE is not on yet, enter the PAYE reference and Accounts Office reference from the employer’s HMRC letter. HydraTax files FPS and EPS against those references. Without them, HMRC cannot match the submission.
2. Add people (once)
- Forename, surname, National Insurance number and tax code (1257L is the default).
- Starter declaration A, B or C — sent on the first FPS only, never again.
- Salary, or an hourly rate plus hours per week if you will upload timesheets.
- Leave payroll ID blank unless you already have one. HydraTax will not reuse an ID, including for leavers, because that splits the HMRC employment record.
- Tick opt-out only if the worker has actually opted out of auto-enrolment.
3. Upload a timesheet if you pay by the hour
Download the Excel template from the Pay run screen. One row per employee. HydraTax matches on payroll ID, NI number or name. Columns it understands:
- hours — ordinary hours this period; payslips are generated from hours × rate.
- overtime_hours — paid at the same hourly rate.
- sick_days — qualifying days of sickness. Statutory sick pay is calculated automatically.
- holiday_hours — paid at normal rate. For irregular-hours workers, tick irregular_hours to accrue 12.07% instead.
- maternity_weeks and maternity_week_from — week 1 of leave is the start of SMP.
Salaried staff with no timesheet row are still paid as a 1/12 or 1/52 split of annual salary. Mix both on the same run if you need to.
4. What HydraTax calculates for 2026/27
- Statutory sick pay — from day 1 of sickness, at the lower of £123.25 a week or 80% of average weekly earnings. Daily rate is that weekly figure divided by qualifying days (usually 5).
- Statutory maternity pay — 90% of average weekly earnings for the first six weeks (uncapped), then the lower of £194.32 or 90% of AWE for weeks 7–39. Average weekly earnings must be at least the Lower Earnings Limit (£129 a week) or SMP is not paid.
- Holiday pay — 5.6 weeks statutory. Irregular-hours workers accrue 12.07% of ordinary pay (5.6 ÷ 46.4). Named holiday hours are paid at the normal hourly rate.
- Workplace pension — auto-enrolment on qualifying earnings (£120–£967 a week, or £520–£4,189 a month). Employee 5%, employer 3%, unless the worker has opted out. Contributions use a net-pay arrangement (pension comes off before PAYE).
Unusual tax codes, salary sacrifice and multi-job PAYE still need a sense-check against HMRC calculators. HydraTax is honest about that — it will not pretend to be a full bureau engine on day one.
5. Preview, then submit FPS
Choose weekly (W1) or monthly (M1), set the period and payday, then Preview pay & checks. You will see gross, SSP/SMP, PAYE, NI, pension and net, plus year-to-date. Traffic-light checks block missing PAYE refs, reused payroll IDs and an empty run. Confirm only when the grid is right — that is the click that builds the Full Payment Submission and sends it to HMRC (or a demo receipt if you are in sandbox).
If nobody was paid this period, do not invent a zero FPS. Use Submit EPS — nobody paid.
6. Print payslips or email a locked pack
History & packs lists each submitted run. Open a payslip in the browser to print. To send the whole month to the client, set a pack password (you choose it, at least eight characters) then Email protected pack or download the zip. The zip holds every payslip plus a payroll summary. Tell the client the password on a call or a separate message — not in the same email as the file.
7. Leavers
Mark leaver with the leaving date. They appear on the final FPS with that date. Their payroll ID is retired. The next person you hire gets a new ID.
That is the loop: people → timesheet if needed → preview → FPS or EPS → locked pack to the client. Same HydraTax client record as corporation tax and VAT.