Simplifying tax codes
One of the big pain points for UK payroll managers is managing the ever-changing employee tax codes. HMRC collects tax from 41 million workers and, on average, 8 million have either been underpaid or overpaid in the tax year. This method does not cater to workers that have changing circumstances throughout the year and then run the risk of facing a hefty tax bill, or waiting until year end to recoup overpayments.
The current process involves HMRC sending an email to the employer advising their employee’s tax code has been changed, adding an extra step in the payroll process. Alternatively, the payroll manager can check the employee tax code on HMRC if they are running a pay. Whilst the option is there for manually checking, it’s an extra manual step in the payroll process, and one that is often either forgotten or that can easily result in mistakes in manual data entry. The only other option then is to update as required upon receiving the email from HMRC, then calculate any changes per employee, based on date and previous pay. All round nightmare for the bureau payroll manager.
Whilst many payroll platforms have spoken about automating tax code updates, KeyPay has automated the process through its API integration with HMRC. Bureau businesses are now able to automatically update employee tax codes, as well as their effective dates directly from HMRC for each employee. This is done each time the pay run is created, removing another manual step for payroll managers.
Tax code updates are just one of many automation features built to save bureau businesses time and ease the workload. Innovation isn’t about keeping up-to-date with legislative changes, it’s about removing the headaches experienced by payroll managers. We see the future of payroll being focused on technology automation. For payroll managers, the work should actually be focused on ‘managing’ the payroll rather than chasing up timesheets and manually adjusting data.