Choose a payroll method and complete setup

How to choose payroll software in the UK

Start with the operating model, not a feature list. Riverside Care first writes down its workforce size, pay frequencies, variable hours, overtime, sleep-ins, mileage, pension duties, approval structure, internal payroll knowledge, continuity risks and budget. That description gives every supplier the same problem to solve.

Compare five workable models

No model removes the employer’s need to provide correct information, protect employee data, approve results, fund employee payments, meet pension duties and pay HMRC. Outsourcing can transfer tasks; it does not automatically transfer legal responsibility.

What HMRC recognition means

HMRC-recognised software can be used to report PAYE information online to HMRC. Recognition does not mean HMRC recommends the product, has assessed its overall quality, confirms that every payroll feature is supported, or accepts responsibility for software problems. HMRC says it cannot recommend one product over another. Read the official software guidance.

Workmax appears on HMRC’s official paid-software list, which was last updated on 3 July 2026. That supports the specific claim that Workmax is recognised for online PAYE reporting. It is not a warranty for every feature, so employers should still test the capabilities they require. Check the current recognised-software list.

Ask each option to demonstrate the same evidence

Compare PAYE reporting, relevant EPS support, payslips, pay frequencies, statutory items, corrections, year end, pension deductions and outputs, usable exports, audit history, permissions, multi-factor authentication, recovery, retention, incident response, support scope and total operating cost.

Do not accept a polished feature slide as evidence. Ask the supplier to show one normal payroll and one relevant exception. The exception might be a late approved overtime change, a rejected submission response in a safe demonstration environment, a changed bank account, an absence or an unexpected variance. Never send dummy FPS information to HMRC for a test.

For pension work, confirm the deductions, reports and interfaces required by your pension arrangement. Do not assume every payroll product automatically submits to every pension provider. For expenses and mileage, establish the required treatment and reporting route; not every expense belongs in payroll.

The scorecard does not contain a preferred model. You choose each criterion’s importance from zero to three, then rate the evidence for every model as unknown, partly demonstrated or demonstrated. Unknown evidence receives no credit. The result preserves ties because two approaches can be equally suitable for different reasons.

Questions that expose the real service

1. Which PAYE reporting and correction tasks are included, and which remain with the employer?
2. Can you demonstrate our pay frequencies, director treatment, variable pay and a realistic exception?
3. Who answers a payroll-treatment question, and who only provides software support?
4. How are preparation, review, submission and payment permissions separated?
5. What audit evidence is visible for pay, bank and access changes?
6. How are records recovered, retained and exported during service and after termination?
7. What are the implementation, training, user, support, pension-interface and export costs?

Configure the employer, not only the product

Record the correct legal entity, employer PAYE reference and Accounts Office reference. Confirm access to PAYE Online or the accountant’s or agent’s authority. Define pay frequencies, contractual paydays, input cut-offs, calculation dates, approval dates and the owner of each action.

The employer configuration should answer:

• Who prepares payroll and who reviews the result?
• Who is authorised to submit an FPS or EPS?
• Who authorises the employee payment instruction?
• Who checks and pays the HMRC liability?
• Who produces and checks pension outputs and interfaces?
• Who owns employee queries and payroll corrections?
• Who provides cover if a key person is unavailable?

For a software-as-a-service provider, do not stop at “do you have backups?” Ask what can be recovered, how quickly, from which point, for how long records remain available and how the employer obtains a complete usable export. Confirm incident response and how administrators recover access without weakening security.

Configure the pension deductions, outputs and interfaces the employer actually needs, but leave employee pension assessment to Lesson 5. Similarly, do not load live starter details simply to complete a product setup wizard. Lesson 4 owns the controlled collection of P45, starter declaration, pay and deduction information.

Which situation applies to you?

Choose the branch that matches the employer. First-time setup is the core path and is open below. Moving an existing payroll is advanced because it adds payroll-ID, year-to-date and submission-continuity risks. Both branches remain readable without JavaScript.

Test outcomes, controls and recovery

Use anonymised cases to compare gross pay, taxable pay, National Insurance earnings, PAYE, employee and employer National Insurance, pension values, authorised deductions and net pay. For director National Insurance, test the method that applies rather than a generic “director” case. For mileage and expenses, test the required treatment and reporting route instead of assuming every item is processed through payroll.

Test payslip content and delivery, reports and interfaces, permissions, audit history, usable exports, recovery and rejection handling. A rejection test should use documentation, a provider demonstration or a safe non-live method—never dummy employee data submitted to HMRC.

Where appropriate, parallel-check representative results against a trusted calculation or existing process. Parallel checking is a recommended migration control, not an HMRC requirement, and it does not authorise two live submissions. Investigate differences in inputs, configuration, payroll IDs and year-to-date values before approving the first live run.

Three key takeaways

1. Choose an operating model from the employer’s work and responsibilities, not a universal product ranking.
2. HMRC recognition supports online PAYE reporting; every other capability and control still needs evidence.
3. A controlled first live payroll has reconciled data, named owners, tested recovery and exactly one authorised submission source.

What comes next

Continue to Lesson 4, Add a new starter correctly, to collect and validate employee records before the first live payroll. The course keeps that curriculum order rather than jumping to the early standalone Lesson 7.

Related resources: switching payroll providers, late PAYE registration and HMRC payroll-software guidance.