COMPLIANCE
Claire Warner FCIPP, Regulatory Analyst, Ciphr, reflects on the challenges and successes of 2025 for pay professionals and looks ahead to what’s next
A s 2025 draws to a close, pay professionals across the UK can take a well-earned moment to reflect. This year has been one of transformation. One that’s been marked by legislative reform, digital acceleration and a renewed focus on the employee experience. From the announced changes to statutory sick pay (SSP) being implemented for 2026/27, to the ongoing statutory parental leave review / consultation and the countdown to mandatory payrolling of benefits in kind (BiKs) (not until April 2027, but this is a huge change!), the profession has faced a series of complex challenges. And, as always, has risen to meet them with resilience and innovation. Payroll’s strategic evolution Once seen as a purely transactional function, payroll has stepped into the spotlight once again in 2025. With rising compliance demands and growing expectations from employees and regulators alike, payroll teams have become strategic partners. We now work closer than ever with human resources (HR), finance and information technology to deliver accurate, timely and transparent pay. This shift has elevated the profession but also increased the pressure. Leaders in pay are now expected to interpret legislation, manage risk and contribute to broader business goals, all while ensuring every payslip is right, every time.
Statutory payments: a new landscape April 2025 brought the rate changes we ordinarily expect to see with statutory payments and the national minimum wage (NMW), but also a significant change to the calculation of employer National Insurance contributions (NICs) and amendments to the employment allowance. We had to ensure systems were updated accordingly and that we communicated the impact of these changes clearly to those updating budgets, outlining any cost implications. For smaller organisations, the financial impact has been particularly acute, prompting many to seek external support or invest in more robust payroll software. BIKs: preparing for mandatory payrolling Mandatory payrolling of most BiKs will start in April 2027, delayed from 2026. This will mark a major shift in reporting, and will require software updates to meet the newly published HM Revenue and Customs (HMRC) real time information requirements for 2027/28. These changes include detailed, field- by-field BiK reporting similar to P11Ds, replacing current combined entries. Class 1A NICs will also move from being annual to monthly payments. Additional guidance is awaited before final changes can be implemented.
In 2025, forward-thinking employers have already been working towards the introduction of payrolling, if they haven’t already been doing it. More will be heading down that route from April 2026, in advance of the mandatory requirements, but also because they’d already started the groundwork for it, including: ● auditing current BiK offerings ● checking payroll systems support the process ● training teams on the compliance requirements ● communicating changes to employees, particularly around company cars and salary sacrifice schemes. This transition is part of HMRC’s broader ‘Making Tax Digital’ strategy, which aims to reduce end-of-year reporting and improve tax transparency. But it also requires a cultural shift – one which payroll teams are leading with professionalism and foresight. Legislative uncertainty: the ERB On top of all this complexity, comes the Employment Rights Bill (ERB). If passed, it could: ● introduce new employee classification rules ● require changes to reporting requirements, especially around gender and diversity pay gap reporting ● introduce gender pay gap and menopause actions plans (voluntary from
| Professional in Payroll, Pensions and Reward | December 2025 - January 2026 | Issue 116 18
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