The Top Payroll Compliance Issues to Watch Out For

Tax laws and regulations are in a state of constant flux. These variations, whether related to income tax, National Insurance contributions, or the taxation of employee benefits, can have significant ramifications for your payroll procedures. Understanding these changes, interpreting them correctly, and applying them accurately to your payroll operations are all essential for maintaining compliance.

In addition to these aspects, it's also crucial to stay updated with the key tax dates and changes each year. Our UK Payroll Legislation Guide for Tax Year 2023-2024 is a comprehensive reference that discusses all the essential details that payroll managers need to know to stay updated with the latest changes.
 

RTI reporting is another compliance challenge. Introduced by HMRC, RTI requires employers to submit payroll information to HMRC in real-time, rather than at the end of the tax year. This system demands rigorous record-keeping and accurate, timely submissions to avoid penalties.

RTI submissions must include details of employees' pay, tax and deductions every time payroll is run. The system not only ensures that employees pay the right amount of tax in the current tax year but also provides HMRC with the information they need to respond more effectively to changes in employees' circumstances throughout the year.
 

The auto-enrolment legislation brought significant changes to workplace pensions. The law mandates employers to automatically enrol eligible employees into a pension scheme and make contributions. Ensuring compliance in this area involves monitoring employee eligibility, managing enrolments and contributions, and maintaining clear records.

Also, remember to regularly review your auto-enrolment processes and stay updated with any changes to the auto-enrolment thresholds and contribution rates.
 

GDPR compliance is another critical consideration in payroll processing. Businesses must handle, store, and process employee data securely and in line with GDPR regulations. Regular audits of data processing activities, awareness training for all staff, and robust data security measures are just some of the steps businesses should take to ensure GDPR compliance.

Statutory pay entitlements like Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), and Statutory Redundancy Pay (SRP) also present compliance challenges. Employers need to understand when employees are eligible for these payments, calculate the correct amounts, and pay them for the required period.

Achieving and maintaining payroll compliance can seem like a daunting task, given the numerous factors involved and the frequency of regulatory changes. However, with a systematic approach, it is manageable.

1. Continuous Education: Regular training sessions for your payroll team on the latest compliance issues can be beneficial. Knowledge is the first defence against non-compliance.
2. Use of Payroll Software: Leveraging advanced payroll software can automate calculations, ensure accurate and timely submissions, and help maintain comprehensive records.
3. Expert Assistance: When in doubt, seek expert advice. This could be through legal counsel, payroll consultants, or HMRC itself.

To stay updated with the latest in payroll legislation and compliance, join us for Payroll Question Time, a recurring free webinar where a panel of experts discusses the latest developments in payroll and answers your pressing questions.
 

Choosing to stay informed is the first step towards compliance. Sign up for our monthly newsletter to receive the latest blogs, event invites, company news, research trends and more.

Our resources page is also an excellent tool for diving deeper into the world of payroll, HR, and compliance.

In the end, maintaining payroll compliance isn’t just about avoiding penalties - it’s about ensuring your business operates ethically and efficiently. By staying abreast of the latest changes and implementing the right practices, your business can successfully navigate the complex landscape of payroll compliance.