Quick Summary
- Your duties start on the day your first employee starts work.
- Enrol staff aged 22 to State Pension age earning over £10,000 a year (£833 a month).
- Minimum contribution is 8% of qualifying earnings (£6,240 to £50,270), with the employer paying at least 3%.
- File your declaration of compliance with The Pensions Regulator within 5 months of your duties start date.
- Re-enrol eligible staff who opted out every 3 years.
Every UK employer must offer a workplace pension and automatically enrol eligible staff — even if you only employ one person part-time. The rules are run by The Pensions Regulator (TPR), and missing a step can lead to fines. Here is how auto-enrolment works for small employers in 2026/27.
When do your duties start?
Your duties start date is the day your first member of staff begins work. From that date you must assess everyone you employ, every time you run payroll. A limited company where the only workers are directors without employment contracts is usually exempt — but tell TPR so they don't chase you.
Step 1: Assess your staff each pay period
| Worker type | Age and earnings (2026/27) | What you must do |
|---|---|---|
| Eligible jobholder | 22 to State Pension age, earning over £10,000 a year | Automatically enrol and contribute |
| Non-eligible jobholder | 16–74 earning £6,240–£10,000, or aged 16–21 / State Pension age–74 earning over £10,000 | Enrol if they ask, and contribute |
| Entitled worker | 16–74 earning £6,240 or less | Let them join if they ask; employer contribution optional |
The thresholds are applied per pay period, so a weekly-paid worker is assessed against £192 a week, not the annual figure. Good payroll software does this automatically.
Step 2: Choose a qualifying pension scheme
You must use a scheme that meets the auto-enrolment rules. Many small employers use NEST (the government-backed scheme, which must accept any employer), The People's Pension or Smart Pension. Check fees and how easily the scheme connects to your payroll software.
Step 3: Enrol staff and write to them
Enrol eligible jobholders within six weeks of their start date (or of becoming eligible), and write to every member of staff explaining how auto-enrolment applies to them. You can use postponement to delay assessment for up to three months — for example during a probation period — but you must write to the employee to tell them.
Step 4: Pay the minimum contributions
Contributions are calculated on qualifying earnings — gross pay between £6,240 and £50,270 a year:
- Employer: at least 3%
- Employee: the rest, normally 5% (including tax relief)
- Total minimum: 8%
Example
An employee earns £24,000 a year. Qualifying earnings are £24,000 − £6,240 = £17,760. The employer pays at least 3% (£532.80 a year) and the employee 5% (£888 a year).
Contributions must reach the pension scheme by the 22nd of the month after they are deducted (19th if paying by cheque).
Step 5: Declaration of compliance
Within 5 months of your duties start date, you must complete a declaration of compliance on TPR's website. It confirms you have met your duties. This is the step small employers most often miss — and it is the one TPR fines first.
Ongoing duties
- Every pay run: assess new and existing staff.
- Opt-outs: staff can opt out within one month of being enrolled and get a full refund. You must not encourage them to opt out.
- Re-enrolment: every 3 years, re-enrol eligible staff who left the scheme and file a re-declaration.
- Records: keep auto-enrolment records for 6 years (opt-out notices for 4 years).
Penalties for getting it wrong
TPR can issue a £400 fixed penalty, followed by escalating daily penalties from £50 to £10,000 a day depending on how many staff you employ. Penalties are avoidable with a reliable payroll process.
Our payroll service runs assessments, contributions and pension files every pay run, so auto-enrolment is handled alongside PAYE and RTI.
Frequently Asked Questions
Do I need to auto-enrol if I only have one employee?
Yes. Auto-enrolment applies as soon as you employ your first member of staff. Companies where the only workers are directors without employment contracts are usually exempt.
What is the auto-enrolment earnings trigger for 2026/27?
The earnings trigger is £10,000 a year (£833 a month or £192 a week). Staff aged 22 to State Pension age earning above it must be automatically enrolled.
How much must employers contribute to a workplace pension?
At least 3% of qualifying earnings, which are earnings between £6,240 and £50,270 a year. Total contributions from employer and employee must be at least 8%.
What is a declaration of compliance?
It is a declaration to The Pensions Regulator that you have met your auto-enrolment duties. It must be completed within 5 months of your duties start date, and again after each 3-yearly re-enrolment.
What happens if I don't comply with auto-enrolment?
The Pensions Regulator can issue a £400 fixed penalty and then escalating daily penalties of £50 to £10,000 a day, depending on the number of staff you employ.
Need Help With Payroll and Pensions?
We run payroll, auto-enrolment assessments and pension contributions for small employers across Glasgow and Clydebank.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.