Payroll Compliance in 2026: Three Areas Where Teams Still Get Caught Out

Payroll Compliance in 2026: Three Areas Where Teams Still Get Caught Out

Payroll rarely goes wrong with a bang.

It usually slips quietly. A deadline gets missed because approvals come in late. A pay element is added but nobody checks the knock-on effect. Holiday pay is calculated the way it always has been, until one employee queries it and suddenly it becomes a bigger issue.

In 2026, we keep seeing the same three areas create avoidable risk for payroll and finance teams:

1. HMRC and RTI reporting
2. Tax and National Insurance thresholds
3. Holiday pay (especially for irregular hours and part-year workers)

Here’s what to look for, and how we at Acudemy teach teams to handle it properly in the real world.

1) HMRC and RTI: the rule is clear, but the process often isn’t

Most teams understand RTI. The problem is usually the workflow around it.

When cut-off dates are loose, approvals drift, and late changes arrive through multiple channels, payroll turns into a weekly scramble. That’s when late submissions and avoidable errors creep in.

What we teach: treat RTI like a rhythm, not an admin task. That means a clear timetable (cut-off, processing, approval, payment, submission), one route for late changes, and a short monthly check to spot repeat causes of late filing.

Quick check: look at your last three pay runs. If anything went in late, don’t brush it off. Find the pattern and fix the process.

2) Thresholds: familiar numbers, unpredictable pay

The thresholds may feel familiar, but pay patterns are less stable than they used to be. Overtime spikes, one-off bonuses, retention payments, and salary sacrifice changes can shift tax and NIC outcomes in ways that surprise managers and employees.

Even when payroll is correct, the team can lose days answering questions if nobody expected the net pay result.

Where it goes wrong:

• one-off payments get approved without anyone sense-checking likely impact
• payroll relies on software outputs, but the team can’t explain the result confidently
• managers get surprised and payroll becomes the helpdesk

What we teach: read the payslip properly and explain it in plain English. We also use a simple “sense-check” exercise with three employee profiles because it mirrors real life:

• a lower earner near NIC thresholds
• a mid earner where a pay spike can change tax in that period
• a higher earner with variable pay elements

Quick check: run that three-profile sense-check on your last pay run. It takes minutes and shows you where confusion will land.

3) Holiday pay: the one that damages trust fastest

Holiday pay becomes personal quickly. People notice it, compare payslips, and talk. If something looks off, trust drops fast.

It also sits between payroll and HR, which is where mistakes hide. One team assumes the other is handling it, and the method stays unchecked for years.

A real example: A night-shift worker queried why his holiday pay was lower than his normal weekly earnings. Payroll explained it was calculated on contracted hours only. The employee spoke to colleagues, people checked payslips, and within two weeks HR had a queue of similar queries.

When the business investigated, overtime and shift enhancements had been excluded from holiday pay calculations for certain staff for years. In peak months, some holiday pay had been 15–20% lower than average weekly earnings. The team later admitted they had relied heavily on software prompts and quick online searches, without formal training in the rules.

What we teach: focus on decision points and evidence. Who counts as irregular hours or part-year, what method is being used, whether it matches the leave year, how “normal pay” is defined and applied, and how to keep payslips clear and transparent.

Quick check: identify your irregular-hours and part-year staff, confirm your leave year start date, and make sure you can evidence your holiday pay method.

A simple 2026 checklist (use this this month)

If you do only three things:

1. Check RTI discipline (payday vs submission timing, and repeat causes)
2. Sense-check thresholds (so net pay changes don’t become chaos)
3. Review holiday pay method (eligibility, consistency, evidence)

Payroll compliance is rarely one big mistake. It’s small decisions repeated over time. The organisations that stay safe are the ones with clear methods, confident teams, and processes that hold up under pressure.