Payroll is one of those business tasks that has to be right, every time. When it runs smoothly, it’s barely noticed. When it doesn’t, it can quickly lead to unhappy staff, HMRC penalties and a lot of unnecessary stress.
We regularly help businesses identify and fix payroll issues before they become bigger problems. Below are some of the most common payroll mistakes we see – and how you can avoid them.
1. Incorrect employee details
Something as simple as the wrong National Insurance number, tax code or bank details can cause errors in pay and deductions.
How to avoid it:
Put a process in place to check employee details when they join and review them periodically. Using cloud-based payroll software can help keep records accurate and up to date, reducing reliance on manual data entry.
2. Missing HMRC deadlines
Late submissions of FPS, EPS or PAYE payments to HMRC can result in fines and interest charges, even if the amounts are only slightly off.
How to avoid it:
Set clear payroll schedules and reminders for key deadlines. Payroll software that links directly to HMRC via Real Time Information (RTI) can help ensure submissions are made on time and in the correct format.
3. Pension auto-enrolment errors
Failing to enrol eligible employees, enrolling them too early, or calculating contributions incorrectly is a very common issue and one that the Pensions Regulator takes seriously.
How to avoid it:
Make sure your payroll system is set up correctly to assess eligibility each pay period. Regular checks and clear reporting will help ensure pension contributions are calculated and submitted correctly.
4. Incorrect tax and National Insurance calculations
Using outdated tax tables or applying the wrong NI category can lead to under or overpayments, which then need to be corrected.
How to avoid it:
Use reliable, up-to-date payroll software and review reports regularly. Errors caught early are far easier to fix than those left for months.
5. Poor record keeping
HMRC requires payroll records to be kept for at least three years. Missing or incomplete records can cause issues during inspections or enquiries.
How to avoid it:
Move away from spreadsheets and paper-based systems. Cloud-based payroll and accounting software keeps records securely stored, backed up and easy to access when needed.
Using the right systems and support
Many payroll mistakes come down to time pressure, manual processes or a lack of clarity around responsibilities. Using cloud-based accountancy and payroll software can significantly reduce risk. Through our partnership with Xero, we can help clients implement easy-to-use cloud solutions that integrate payroll, accounting and reporting in one place.
Just as importantly, having an adviser who understands your business makes a real difference. We talk to clients in plain English, focus on what actually matters, and provide proactive support – not just compliance. If you’re concerned about payroll errors or want to make your payroll process simpler and more reliable, get in touch with Appleby Mall for a free initial meeting. We’ll help you put the right systems and processes in place so payroll becomes one less thing to worry about.