Payroll Checklist 2026/2027: 10 Things Every Employer Should Review 

Payroll is one of the most important responsibilities within any organisation. Employees expect to be paid accurately and on time, while employers must meet a range of compliance obligations relating to PAYE, National Insurance, pensions, statutory payments and reporting requirements. 

For many businesses, payroll processes develop gradually over time. As teams grow, regulations change and technology evolves, small issues can easily go unnoticed. An annual payroll review helps identify potential risks, improve efficiency and ensure payroll remains compliant. 

In this guide, we outline ten areas every employer should review during the 2026/2027 tax year and explain how regular payroll checks can support accurate payroll administration. 

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What Is a Payroll Checklist? 

A payroll checklist is a structured review of the processes, records and compliance obligations associated with running payroll. 

It helps employers confirm that: 

• Employees are paid correctly 
• Payroll records are accurate and up to date 
• HMRC reporting requirements are being met 
• Pension obligations are fulfilled 
• Internal payroll procedures remain effective 
• Payroll compliance requirements are being met, including National Minimum Wage compliance, accurate holiday pay calculations, and correct administration of statutory payments such as Statutory Sick Pay (SSP). 

A payroll checklist acts as a preventative measure, helping businesses identify issues before they result in employee dissatisfaction, compliance concerns or financial penalties. 

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Why Is an Annual Payroll Review Important? 

An annual payroll review helps employers maintain accuracy, reduce risk and adapt to regulatory change. 

We often find when speaking to clients that payroll processes which worked well several years ago may no longer be appropriate for the current size or complexity of the organisation. 

Regular reviews can help businesses: 

• Reduce payroll errors 
• Improve employee confidence and satisfaction 
• Prepare for HMRC enquiries or audits 
• Ensure compliance with changing legislation 
• Strengthen internal controls 
• Improve payroll efficiency 

A yearly review creates an opportunity to assess whether existing payroll arrangements remain fit for purpose. 

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The 10 Payroll Areas Every Employer Should Review 

1. Employee Records and Personal Information 

Accurate employee information forms the foundation of compliant payroll processing. 

Review records to ensure the following details are current: 

• Full name 
• Home address 
• Date of birth 
• National Insurance number 
• Tax code 
• Bank account information 
• Employment status 

Outdated employee records can result in incorrect tax deductions, payment delays and reporting errors. 

2. PAYE Tax Codes 

Incorrect tax codes are one of the most common causes of payroll errors. 

Review employee tax codes against HMRC notifications and ensure all updates have been applied promptly. 

Pay particular attention to: 

• New starters 
• Employees who have multiple jobs 
• Directors 
• Employees receiving taxable benefits 
• Individuals with recent changes in circumstances 

Where discrepancies are identified, they should be investigated and corrected as quickly as possible. 

3. National Minimum Wage and National Living Wage Compliance 

Employers should review pay rates regularly to ensure workers continue to receive at least the applicable minimum wage entitlement. 

This review should include: 

• Hourly-paid employees 
• Salaried staff 
• Apprentices 
• Casual workers 
• Part-time employees 

Compliance reviews should also consider deductions, salary sacrifice arrangements and unpaid working time, as these can affect minimum wage calculations. 

4. Pension Auto Enrolment Responsibilities 

Workplace pension obligations remain a key employer responsibility. 

Review whether: 

• Eligible employees are enrolled correctly 
• Pension contributions are accurate 
• Employee opt-outs have been processed appropriately 
• Records are being retained correctly 
• Contribution rates remain compliant 

Errors in pension administration can be difficult to identify if they accumulate over several years, making regular checks particularly important. 

5. Statutory Payments Administration 

Employers should periodically review how statutory payments are administered. 

This includes: 

• Statutory Sick Pay (SSP) 
• Statutory Maternity Pay (SMP) 
• Statutory Paternity Pay 
• Statutory Adoption Pay 
• Statutory Shared Parental Pay 

Check that eligibility assessments, calculations and documentation procedures remain accurate and consistent.

6. Payroll Processes for Starters and Leavers 

Employee turnover creates significant payroll administration activity. 

Review processes for: 

• Collecting starter information 
• Obtaining and processing P45 details 
• New starter declarations 
• Final salary calculations 
• Holiday pay calculations 
• Leaver reporting requirements 

Strong procedures reduce the likelihood of errors occurring during employee onboarding and departures. 

7. Payroll Reporting and RTI Submissions 

Real Time Information (RTI) reporting is a core PAYE requirement. 

Review whether payroll submissions are: 

• Filed on time 
• Accurate 
• Supported by appropriate records 
• Reconciled against payroll data 

Late or inaccurate submissions can create unnecessary correspondence with HMRC and may lead to penalties. 

8. Payroll Security and Data Protection 

Payroll teams handle highly sensitive personal and financial information. 

Annual reviews should assess: 

• User access permissions 
• Password controls 
• Data storage procedures 
• Cybersecurity measures 
• Record retention practices 
• GDPR compliance arrangements 

As payroll data remains a frequent target for cybercrime, robust controls are increasingly important. 

9. Payroll Software and System Performance 

Payroll software should be reviewed regularly to ensure it continues to meet organisational needs. 

Consider: 

• Software functionality 
• Reporting capability 
• Integration with HR systems 
• Automation opportunities 
• System updates 
• User experience 

Technology improvements often provide opportunities to reduce manual work and minimise processing errors. 

10. Payroll Policies and Internal Controls 

Payroll procedures should be documented and understood by relevant personnel. 

Review: 

• Payroll approval processes 
• Segregation of duties 
• Authorisation controls 
• Payroll deadlines 
• Documentation standards 
• Contingency arrangements 

Well-defined controls help reduce the risk of errors, fraud and operational disruption. 

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Factors That Affect Payroll Compliance 

Payroll compliance is influenced by several factors beyond routine processing. 

Key considerations include: 

Legislative Changes 

Employment and payroll regulations change regularly. Employers should ensure procedures are updated to reflect current requirements. 

Workforce Growth 

As organisations recruit additional employees, payroll administration often becomes more complex. 

Flexible Working Arrangements 

Remote working, hybrid working, varied hours and contractual changes can impact payroll calculations and reporting obligations. 

Employee Benefits 

Benefits such as company cars, health insurance, salary sacrifice arrangements and bonus schemes may affect payroll treatment and employer reporting requirements. 

Internal Resource Levels 

Many payroll issues arise when key personnel leave or responsibilities change without appropriate handover processes. 

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How Employers Can Improve Payroll Accuracy 

Improving payroll accuracy is often easier than employers expect when consistent processes are applied. 

Practical improvements include: 

• Maintaining accurate employee records 
• Performing regular reconciliations 
• Providing payroll training for relevant staff 
• Reviewing payroll reports before submission 
• Using automated payroll software where appropriate 
• Establishing clear payroll deadlines 
• Implementing documented approval procedures 

We often find that businesses achieve the greatest improvement by focusing on consistency rather than introducing complex new systems. 

For organisations seeking additional support, outsourcing payroll administration to experienced professionals can also provide assurance that payroll obligations are being managed accurately and efficiently. Henderson Loggie’s dedicated payroll service helps organisations maintain compliance while ensuring employees are paid correctly and on time. 

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When Should You Seek Professional Payroll Advice? 

Professional payroll advice may be worth considering when: 

• The organisation is growing rapidly 
• Payroll regulations have become difficult to monitor internally 
• Complex pension or benefits arrangements exist 
• Frequent payroll errors are occurring 
• HMRC queries have arisen 
• Existing payroll staff have limited capacity 

Seeking advice early can often help prevent more significant compliance issues developing later. 

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Conclusion 

An annual payroll review is one of the most effective ways to maintain payroll accuracy, strengthen compliance and support efficient administration. 

By reviewing employee records, PAYE processes, pension obligations, statutory payments, reporting procedures and internal controls each year, employers can reduce risk and ensure payroll continues to operate effectively. 

Payroll requirements continue to evolve, and regular reviews help organisations remain confident that employees are paid correctly, reporting obligations are met and processes remain fit for purpose. 

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