Payroll software strategy framework in England: six decision gates

Treat the purchase as six gates, not a feature contest. A candidate advances only when the same employer scenario produces reviewable evidence, statutory reporting works in the relevant cases, and commercial assumptions are visible. A product may meet a compliance threshold yet still fail the employer's operating needs.

What employer case should every supplier face?

Define the employer's payroll case first, then apply it unchanged to every candidate. Name the operator, pay pattern, pension work and exclusions, and use those boundaries to decide in advance which inputs, outputs and exceptions each trial must expose consistently.

Map each hand-off from inputs to outputs with the operating workflow, align the test conditions with the selection checklist, and store the scenario, exclusions and evidence owner in a planning record. That baseline keeps every later comparison anchored to the same task; a feature description alone does not establish that the task works.

Which payroll products can enter a trial?

Only employers without an exemption must use payroll software to report PAYE information online; they may consider products recognised by HMRC. Recognition makes a product eligible for testing, but proves neither fit for the employer nor endorsement by HMRC itself.

The GOV.UK payroll software page says HMRC cannot recommend one product or service over another and is not responsible for problems with software an employer buys. Apply identical acceptance criteria to each candidate, recording trial observations rather than elevating supplier descriptions into evidence.

How should I test a month with no pay?

A no-payment month needs its own test because reporting and payment dates differ. A PAYE tax month runs from the 6th of one month through the 5th of the next, and an Employer Payment Summary (EPS) must be sent when no employees were paid during that tax month.

An EPS may be submitted by the 19th of the following tax month to claim a reduction in the amount owed to HMRC, for example a reduction for statutory pay. HMRC payment is due by the 22nd, or by the 19th when paying by post, so record filing and payment timing separately.

What should a starter and pension trial reveal?

Run one new-starter case alongside the pension process for every candidate. The evidence should show what payroll staff enter, what the software handles, which duties stay with the operator, and whether data can pass between payroll software and the pension scheme.

For each new employee, collect personal details and a P45 so the tax code can be worked out. Record the entries, the operator's checks and the evidence left behind, then repeat the same starter example across candidates so any difference reflects product behaviour rather than altered inputs.

The Pensions Regulator's payroll-process checks recommend confirming that software is designed to perform all automatic-enrolment tasks and can work with the pension scheme to allow easy data transfer. Identify which tasks are covered and test the exchange route, keeping the observed result instead of relying on supplier assurance.

Re-enrolment takes place every three years for certain staff who have left their pension scheme. Employers must also complete a re-declaration of compliance even when nobody is due to be put back in. Test both processes, marking what the software supports and what action remains with the operator.

What must an FPS test show?

Require an FPS trial to trace payroll inputs through submission, including a correction where relevant. It passes only if a reviewer can observe the outcome for the agreed employer case, with identical test conditions applied to every candidate in the comparison.

A Full Payment Submission (FPS) tells HMRC about employee payments and deductions, and it must cover every person paid, including someone receiving less than £96 in a week. Check that a reviewer can trace source entries into the submitted return and, where relevant, through any correction.

Send the FPS on or before payday, even when HMRC is paid quarterly rather than monthly. If the actual pay date shifts earlier or later than usual, enter the usual pay date. Keep that timetable fixed in each trial and record the filing outcome against the same conditions, so comparisons do not benefit from a shifted test.

If staff have been paid but an FPS is missing or late, HMRC will issue a late-filing notice and may charge a penalty unless there is a valid reason for the delay. Keep the result and any open issue in the record; a run with an unresolved failure cannot count as passed.

When is the commercial case ready for approval?

Approve the business case only when a decision record connects the employer scenario to observed outcomes, names a reviewer and states a result. Keep open questions visible: a broad compliance statement cannot establish that the product handles the employer's actual payroll work.

Assess business fit beside test outcomes, and write down assumptions for acquisition, onboarding, support, exception handling and maintenance. The pricing models and hidden costs help prompt that review. Hold approval if reporting or pension checks remain open, the scenario is unsupported, or projected economics depend on assumptions that have not been tested.

Organise the review with a quality checklist and connect the result to handover through tool implementation. The decision record should say what passed, what remains open, and why the chosen option fits the employer case. A general promise from a supplier cannot replace those recorded results.

What should I do first?

Begin with a written employer case, then make each shortlisted product face the same six gates. Do not approve the purchase while an HMRC filing, pension process or commercial assumption remains unresolved; keep the evidence together for a clear handover rather than relying on a supplier's assurance.