Tips for managing your payroll more efficiently

Running payroll should reward your team, not distract you from the rest of the business. Yet many owners tell us the process feels more complicated each year. In this blog, we share practical, up‑to‑date tips for managing your payroll so you can pay employees accurately, comply with the 2025/26 rules and free up time for growth. Whether you employ two people or 200, the ideas below will help you reduce errors, improve cashflow and keep HMRC happy.

Know your statutory deadlines and thresholds

Missing a filing or payment date is the quickest way to pick up an avoidable penalty. Create a payroll calendar that highlights the following.

• Full payment submission (FPS): Must reach HMRC on or before pay day.
• Employer payment summary (EPS): Due by the 19th of the following month if you reclaim statutory payments or claim the employment allowance.
• PAYE and national insurance contributions (NIC): Cleared funds by the 22nd if you pay electronically (19th for cheque).
• Year‑end final submission: No later than 19 April.

Keep the current thresholds in one place. For 2025/26 the personal allowance remains £12,570 and the secondary Class 1 NIC rate has risen to 15%.

Keep employee data clean and up to date

Accurate data is the cornerstone of efficient payroll. Make it a monthly habit to:

• confirm starters and leavers have the correct start/leave dates and P45 details
• check national insurance category letters, especially for employees turning 21 or reaching state pension age
• review address changes – HMRC uses postcodes to match Real Time Information (RTI) data.

According to early‑estimate RTI data, 30.4m people were on UK payrolls in February 2025. Even a 1% error rate would affect more than 300,000 employees, so small data mismatches quickly snowball.

Automate calculations and reporting

Manual spreadsheets invite mistakes and take hours to reconcile. HMRC‑recognised software will:

• calculate PAYE, NIC, student loans and pension deductions automatically
• flag when a pay run would push an employee below the national living wage (now £12.21 for staff aged 21+ from 1 April 2025)
• submit RTI data straight to HMRC and integrate with accounting packages, saving double‑keying.

If you already use cloud accounting, look for an API connection so journals post automatically. This alone can cut month‑end processing time by 40-60 minutes per pay run.

Control employer NIC and pension costs

The 1.2 percentage‑point rise in the secondary NIC rate makes payroll planning more important than ever. Consider the following.

• Salary‑sacrifice pension contributions: Swapping gross pay for employer pension contributions saves both parties 15% NIC, provided employees stay above the minimum wage.
• Employment allowance: Now worth up to £10,500 per year to eligible businesses.
• Apprentices under 25: Still exempt from employer NIC on earnings below £50,270, offering relief for training roles.

Reconcile every pay run and review exception reports

Build a short checklist that the responsible manager signs off each month.

1. Gross‑to‑net totals match the bank payment file.
2. Control account balances to zero after journals post.
3. Leaver P45s generated and electronic payslips issued.
4. Any negative net pays (such as salary sacrifice) reviewed before BACS is approved.

If your software produces exception reports – for instance employees with net pay under £1 – read them. They are often the first sign of a coding error or benefit misclassification.

Practical tips for managing your payroll with digital tools

Adopt self‑service portals: Employees can download payslips and update personal details, cutting HR queries by up to 30% within six months, according to ONS digital‑skills case studies (2024).

Use automated journal integrations: Most modern payroll apps push entries to Xero, QuickBooks or Sage. One Glasgow manufacturer we support reduced month‑end close from six to four days after switching.

Schedule compliance checks: Built‑in “health checks” remind you to review right‑to‑work documents and holiday accruals before the year‑end rush.

Run pay‑on‑demand simulations: Scenario tools help you model the NIC impact of bonus schemes or overtime in seconds, so cash outflows never surprise the finance team.

Reduce risk by keeping HMRC links close

Bookmark the following pages and share them with anyone who covers payroll when you are on leave:

• HMRC rates and thresholds for employers 2025 to 2026 – authoritative figures in one place.
• HMRC guide to running payroll – step‑by‑step help on everything from PAYE basics to year‑end tasks.

Both pages update automatically, so you always refer to the latest numbers.

When outsourcing makes sense

If payroll still eats more time than you can spare, outsourcing can be cost‑effective. Our dedicated payroll services team files RTI on your behalf, manages auto‑enrolment and deals with HMRC queries, leaving you free to run the business. We also offer joined‑up business accounting support when you want a single point of contact.

Key takeaways

Efficient payroll is not an optional extra; it underpins staff morale, cashflow forecasting and your reputation with HMRC. By putting these tips for managing your payroll into practice – keeping statutory dates front-of-mind, automating calculations, reconciling every pay run and reviewing exception reports – you create a repeatable process that withstands holiday cover, organisational growth and fresh legislation.

Our experience over the past 50 years shows that businesses that invest time in data quality and integrated software save far more than the cost of the upgrades: they spend fewer hours fixing avoidable errors, avoid late-filing penalties and make more confident hiring decisions because labour costs are visible in real time.

Staff also notice the difference. Consistently accurate payslips and prompt HMRC submissions reinforce trust and reduce payroll-related queries, freeing your team to focus on higher-value work.

If you would like tailored tips for managing your payroll – or a fully outsourced service that removes the burden altogether – we are ready to help. Contact us today for a review of your current setup and see how much time and money you could save.