Are you keeping up with payroll record requirements?

The first week of September is National Payroll Week, the 26th one since its inception, but we want to take things further than a week because we know that payroll is a year-round commitment.

As we always go the extra mile, we are dedicating an entire month to exploring the ins and outs of payroll so that some of your biggest questions can be answered and your greatest challenges addressed.

Consider this the start of the Monahans Payroll Month and keep coming back for more insights over the course of September.

To kick off the month, we are going to take a look at the Chartered Institute of Payroll Professionals (CIPP) payroll survey to see what valuable insights can help steer payroll best practice.

How are businesses currently managing payroll?

Technology is becoming an ever more ubiquitous part of our lives, and it is little wonder that one of the most significant changes in payroll processing stems from the implementation of technology.

HM Revenue and Customs (HMRC) are implementing a number of changes to boost compliance with filings and financial records, and many of these centre on the use of specialist software.

Unsurprisingly, adopting digital payroll records can be a key way of staying compliant with these new changes.

Making Tax Digital (MTD), for instance, will necessitate more businesses to adopt digital processes wherever possible.

This is important to highlight as only 65 per cent of businesses use fully digital systems, with 28 per cent relying on a mixture of digital and paper systems.

That hybrid approach sounds good in theory, but it can result in some important information slipping through the cracks.

The real payroll champions are the six per cent of businesses that have taken the time to create physical and digital records of all payrolling information.

For these businesses, there is nothing that can stop them from accessing payroll information whenever they need it.

As cybersecurity becomes an increasing concern for businesses and organisations alike, there is a growing view that the role of paper records may not truly be at an end.

Still, if you are a business that intends to keep paper records, these should mirror the digital records that you maintain to ensure full compliance and utility.

What payroll records do businesses need to keep?

Sometimes, there can be some confusion as to the obligations for payroll records, particularly regarding employees who are no longer with the company.

Best practice involves maintaining all of the current tax year’s payroll records as well as those for the previous six tax years.

This ensures that you can address any issues or irregularities that arise, even if they occur a few years later.

With digital records requiring less maintenance, it is possible that some companies may keep records far beyond that seven-year window.

However, any companies keeping records for an extended period of time need to ensure that these are kept in accordance with the latest rules regarding security and data protection.

The retention of records is an area where payroll compliance is improving, as there was an increase of 26.49 per cent in this practice.

Fundamentally, though, payroll still seems to be viewed as a compliance issue first and foremost, and this needs to change.

More than half of employers do not use any tools to ensure their employees grasp pay slip information or how deductions are calculated.

This is problematic for workers who want to understand their financial power within the troubled economic climate in which we find ourselves.

Over the course of this month, we will help you understand your obligations and the steps you can take to move beyond compliance and make payroll work more for you and for your employees.

As always, our expert team is on hand to guide you through your payroll to ensure that your team is paid what they are owed when they are owed it.

If you want to take the stress out of payroll, speak to our team today!

Neil Manuel