First published on Thursday, September 11, 2025
Last updated on Friday, October 3, 2025
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25% of UK PAYE employees received incorrect payslips this year. That’s research from The Global Payroll Association. That’s one in four workers. The chances are high it’s happening in your business too.
Add to those frequent changes to legislation and complex tasks, the challenges of payroll for small businesses start to feel never-ending.
Here’s the real problem: payroll is an essential element of running a business and so, it is necessary to get it right. And yet, many businesses think they can handle it alone, despite the data telling us that even business owners don’t know the answer to simple payroll-related questions such as:
“What is payroll?”
“Do I need an accountant to do payroll?”
“What is PAYE?”
“How to create a payslip for an employee?”
These questions reveal the real challenge: small businesses are expected to navigate complex payroll requirements with zero training or expertise.
And where there is lack of knowledge, there are errors. And this could not be truer than in the case of payroll.
So, let’s help you and your team answer some of these questions and understand the basics of payroll.
To you get started, grab our FREE Payroll Basics Guide to look at some of the fundamentals all business owners need to know
Paying employees and distributing payslips
You staff need accurate pay on time. It’s not negotiable. When businesses mess this up, the damage goes beyond making a simple correction. Your team loses trust, you risk HMRC penalties, and good people leave.
Paying your staff is a complex process and isn’t as simple as completing a bank transfer or signing a cheque.
There are several steps you must take to set up your payroll process, register with HMRC, and manage payments with direct deposits.
Once an employee has been paid, proof of this must also be supplied in the form of a payslip.
Payslips are a legal requirement but are often overlooked. And as we previously mentioned, they can and do go wrong.
From payment errors to miscalculations and displaying the wrong employee data. Having a robust system in place for distributing payslips accurately and on time, with no mistakes, is the ideal solution for businesses looking to save time and enhance their payroll management.
Staying compliant with laws and HMRC
When searches for “What is HMRC in the UK?” and “What does HMRC stand for?” receive thousands of searches on Google every month, it’s fair to say that many do not understand their legal obligations.
Payroll laws are incredibly complex to navigate. Failing to comply with them can result in penalties, fines and even complex investigations from HMRC. It’s not just the tax dodgers and illegal businesses failing to stay compliant. Simple mistakes such as missing submissions or failing to accurately enrol staff on payroll software could place you at the forefront of an investigation.
Payroll laws regularly change too, particularly surrounding topics such as:
Staying up to date is key. At BrightHR we provide employment law advice services from our team of HR and employment law experts. With all the information you need to know about statutory payments and changes to the law. For example, SSP, holiday pay and updates to the national minimum wage. Plus, our managed payroll service is handled by a team of CIPP-qualified professionals who can support you in staying HMRC compliant.
Download our FREE PAYE Guide for answers to real questions on registrations, tax codes, and handling employees with no P45.
Understanding tax and national insurance obligations
National Insurance and tax are two elements of payroll that are required under law.
Search data indicates that both employers and employees are unaware of the current tax rates and thresholds. With these queries and other variations receiving thousands of monthly searches:
“How much National Insurance will I pay?”
“What is the current NI rate in the UK?”
“How much tax will I pay on my wage in the UK?”
And with over 300,000 monthly searches for “tax calculator” it doesn’t just highlight the limited understanding of tax in general but the lack of support from employers when employees ask for more information about their wages and payslips.
Get clear answers on Tax and National Insurance deductions for your team with our handy guide. Download and share it with your team today.
If you find yourself unable to explain a payslip to an employee, for example if they ask about a deduction, they may choose to raise a grievance or seek third-party support such as from a trade union.
Help your team decode the abbreviations, deductions, and codes on their payslips with our guide. Download and share it now.
Understanding current tax rates, payslip deductions, and national insurance contributions is essential. This knowledge puts you in the best position to support both your employees and your business.
The tax band talent drain
Your best employee just turned down a promotion. Why?
“I don’t want to move into the 40% tax band, I’ll lose money”. Sound familiar?
This happens in businesses across the UK every day. Smart people make career decisions based on tax myths. They turn down raises, refuse promotions, or ask for lower salaries to “avoid higher tax bands”.
The damage compounds over time. Your star performers stagnate. Salary negotiations become battles imaginary maths. You lose good people to companies whose employees understand how tax actually works.
Choosing the right payroll system
One of the hardest challenges for small businesses in the UK, is finding the right solutions to support business operations. Outdated software or manual spreadsheets consume time. They also increase the risks of common payroll errors, inefficiencies, and poor data security.
Our keyword research highlights the need so many have for a real solution
“Which payroll software is best in the UK?”
“Which software is mostly used for payroll?”
“How much does payroll cost for a small business UK?"
It’s clear that so many are struggling to find a payroll software and solution that does what is required at a price that fits the budget.
Your chosen payroll software should provide you with the features and tools you need to seamlessly pay staff, make deductions, and accurately record payroll data.
While HMRC cannot advise you on which services to choose from, you should consider the needs of your business when finding the right payroll software.
Simplify payroll for your small business with managed payroll services
The payroll industry is growing dramatically, with more and more digital solutions available to businesses with all types of budgets and business models.
Payroll has always caused headaches, leading to errors, inaccurate payments, and HMRC complications. But it doesn’t have to be this way.
Outsourcing payroll is the number one solution for small businesses in the UK looking to get it right the first time. As automation within HR and payroll increases, the need for in-house payroll teams is lessening. And with the external support of payroll experts available in just a few clicks, it’s no wonder that so many small businesses are choosing to invest in an all-in-one solution!
With a managed payroll solution from BrightHR you will receive:
Support from experts in the industry
Hassle-free payroll management with everything handled for you
HMRC compliance and deductions calculated in line with legislation
Payslips issued on time, every time via our payroll software
Cut admin time and get back to what matters most for your small business. Outsourcing your payroll with BrightHR gives you trusted support from our CIPP-qualified payroll team. This helps you overcome the many challenges that have caused you payroll pains in the past.
To find out more book a free demo today.
