A payroll workflow from opening the period to reconciling the outputs

The period runs in a fixed order: confirm the employer and period details, collect and validate changes, calculate, approve, file, pay and reconcile.

What to take away

A period opens with the legal employer, PAYE reference, pay date, frequency and the authorised operator.
The Full Payment Submission is due on or before payday, so validation and approval have to finish earlier than the pay date.
Reconciliation ties four totals togetherthe approved payroll, employee net pay, the HMRC liability and pension contributions.
Pension files must meet the provider's deadline, which is often earlier than the contribution collection date.
The correction route depends on the error and its timingan amended FPS, an EPS or a fix carried in the next period.

Opening checks and the locked baseline

Confirm the legal employer, PAYE reference, pay date, frequency, tax year and the operator authorised for this period. Copy the prior approved payroll so every change is visible against a known start.

HMRC's running payroll guidance sets the rhythm. Tasks repeat each tax month, and reported pay and deductions must reach HMRC on or before payday. The reporting rules are UK-wide; Scottish Income Tax changes the tables.

Period Opening Checks

Confirm legal employer and PAYE scheme
Verify pay date and frequency
Check active population and tax year
Identify authorised operator
Lock or copy prior approved state

Where more than one person touches payroll, settle the approval boundary before the period opens. Payroll software contracts should name who calculates, who approves and who files; the clauses worth reading are covered in payroll software contracts in England.

Collecting and validating changes

Starters, leavers, hours, overtime, absence, bonuses and bank changes should arrive through one approved route with a stated cut-off and a named approver.

Validation checks completeness, effective dates, duplicates and values outside the normal range for that employee. Record the source, timestamp, approver and exception state for each change. Bulk uploads still need an owner, since a file that arrives is not an approved change.

Change Validation Flow

Receive changes via approved routes
Apply cut-off times and named approval
Validate completeness and effective dates
Check duplicates and unusual values
Preserve source, timestamp, approver, exception state

Tools that carry the workflow

Test any shortlist on your own pay elements rather than on a feature list.

Typical fit

HMRC Basic PAYE Tools: Free filing for employers under ten staff
BrightPay: Small employers and bureaux
Xero Payroll: Xero accounting users
Sage Payroll: Teams wanting desktop control
QuickBooks Payroll: Payroll beside bookkeeping

Check first

HMRC Basic PAYE Tools: No bureau features
BrightPay: Provider file formats
Xero Payroll: Pension setup time
Sage Payroll: Update discipline
QuickBooks Payroll: Bureaux parallel runs

A wider comparison of starting points, with the limits of each, sits in payroll starting points and their limits.

Example: a gross-to-net and reconciliation check

These illustrative figures cover one monthly-paid employee on £2,500.00 gross, with a net pay pension arrangement at 5% employee and 3% employer.

Gross-to-net and reconciliation check

Gross pay: £2,500.00
PAYE income tax: £290.50
Employee National Insurance: £116.20
Employee pension at 5%: £125.00
Net pay: £1,968.30
Employer National Insurance: £261.25
Employer pension at 3%: £75.00

The figures are illustrative, not a quote. They support four checks. Net pay lines must total the payment file. Gross pay plus employer costs gives the cost of employment. PAYE plus National Insurance must match the HMRC liability. Pension contributions must agree with the provider statement.

Cut-offs and deadlines that shape the timetable

A period usually fails on dates rather than arithmetic, so write the timetable down.

HMRC's reporting guidance states that the FPS is generally due on or before payday, and that errors should be corrected as soon as they are found.

Cut-offs and deadlines

Choose an input cut-off before payday, commonly two to three working days.
Approve the payroll before any payment file or instruction is released.
File the FPS on or before payday.
Send pension files by the provider's deadline, which may fall several working days before the collection date.
Correct errors through the route that fits the error, not a blanket reversal.

Correcting errors after submission

HMRC's guidance on correcting your FPS or EPS explains that the method depends on the error and its timing. A missed change often goes into the next FPS, while some adjustments need an EPS.

Log who authorised the correction, what changed and which period carries it. Repeated corrections point at the source process, not at the payroll operator. Distinguishing a process fault from a one-off input error matters when you describe the fix, and attributing payroll incidents and corrections sets out a defensible approach.

Common questions

What must be confirmed before opening a payroll period?

The legal employer, PAYE reference, pay date, frequency, tax year and the authorised operator. Copy the last approved payroll so that changes are traceable.

When is the FPS due, and what happens if it is wrong?

On or before payday. If figures change afterwards, correct the submission as soon as the error is found, using the method HMRC gives for that error.

How should pension files be handled?

Calculate contributions, check the provider's format and deadline, then send the file and confirm acceptance. The Pensions Regulator's software checklist covers provider formats, the tax relief method and record keeping. A generated file is not a completed contribution.

How do I reconcile outputs before closing the period?

Tie net pay to the payment file, add employer costs to gross pay for the cost of employment, and match PAYE and National Insurance to the HMRC liability. Give every difference an owner and a deadline before closing.