Payroll software updates 2022/23
How are you preparing your payroll for the new tax year?
How are you preparing your payroll for the new tax year?
Payroll software providers undertake regular reviews and change their software to meet the ever-changing requirements of the legislation, and ensure their customers are able to process a compliant payroll. In most cases, any changes to the payroll software are notified to their customers in advance to allow the appropriate testing to be completed, configuring the payroll to meet any internal requirements, train the payroll team, and update process documents ahead of accepting, and confirming changes. The responsibility of changes being implemented correctly within the payroll software will ultimately lie with the payroll department. Therefore, it’s imperative that relevant testing and reviews are applied to any changes ahead of implementation.
What should employers consider?
Payroll departments may not be aware that the responsibility is in fact on them when it comes to their payroll software correctly implementing changes for the year ahead.
With the new tax year fast approaching, and changes in rates such as the temporary increase in National Insurance Contributions prior to the Health and Social Levy coming into force next year, best practice is to schedule time as soon as possible to complete testing following the update taking place, should you not have had the opportunity to do so in advance. It is worth noting that testing will not only need to be applied to the payroll software, but also to any reports which are generated or extracted, to confirm that the results are as expected.
What should payroll teams do now?
Typically, payroll will provide reports to internal, and in some cases, external departments so the payroll team should look to knowledge share with relevant stakeholders to meet their expectations on any changes which will appear on their deliverables.
As part of testing and reviewing the changes, the payroll department may identify issues within the software. However, these can be addressed with the payroll provider in advance, so a fix can be undertaken ahead of implementation.
By taking a pro-active approach to the payroll software testing and review, this will allow the payroll team to be in a confident position that the delivery of the April payroll, and payrolls moving forward, will be correct and compliant against the new legislative requirements for the tax year.
What should payroll testing cover?
The testing programme which the payroll department follow for the new tax year software update provides a baseline process which can be followed for each update ensuring payroll compliance is applied and unaffected from the update, along with confidence in their software, and its provider.
Each employer’s payroll testing programme will be driven by their specific requirements, but might include:
- A sample payslip review of PAYE and NIC - Has this been calculated based on the new annual rates and thresholds?;
- Employee tax codes – Have employees reverted to a cumulative position for the new tax year, other than where a P9 is received overriding this?; and
- National Minimum Wage rates – Have the new rates been applied to the software and controls updated to reflect these?
