Payroll errors drive UK staff into debt & new jobs

UK employees are reporting frequent payroll errors and limited communication about upcoming tax and payroll rule changes, according to research commissioned by workforce management supplier HBHR.

The survey of 2,000 employed adults found that 23% had spotted a mistake on their payslip in the past 12 months. It also suggests a sizeable minority feel financially exposed to even a single payroll problem.

The findings come ahead of new HMRC payroll and tax rules due to take effect on 6 April 2026. Employers will face additional compliance tasks and potential process changes once the new requirements come into force.

Financial strain

The research points to direct consequences from wrong or late pay. Nearly a quarter of respondents (24%) said pay errors had made it harder to afford essentials such as rent or mortgage payments, food, and energy. One in five (20%) said a wrong or late payslip had caused them to miss a bill or regular payment.

London-based employees reported higher levels of disruption. Among Londoners, 34% said they had been unable to cover a bill after a payroll issue, while 31% said they had borrowed money, including on credit cards, via overdrafts, or from friends and family.

Younger workers reported a sharper impact. Gen Z respondents were more likely to say a pay error had pushed them into arrears: 37% said they had fallen behind because of pay mistakes, while 31% said they had borrowed money to cover the gap.

Across all employees, 32% said they could not cope if their main pay was wrong or late even once. Among Gen Z workers, the figure was 38%.

Retention risk

The study links payroll reliability with staff retention. If payroll errors continued over six months, 61% of respondents said they would be likely to look for a new job.

The likelihood of moving was higher among younger cohorts. If errors continued for six months, 76% of Gen Z respondents and 72% of millennials said they would be likely to look for a new job.

Respondents also expressed strong expectations that employers should invest in payroll processes. In the survey, 85% said businesses should use up-to-date payroll technology to minimise errors, and 72% said modern systems underpin their confidence that pay will be accurate and on time.

Confidence gap

The research highlighted differences between age groups in perceived payroll reliability. Only 29% of Gen Z and millennial respondents said they felt very confident and did not worry about payroll mistakes, compared with 43% of baby boomers.

A similar split emerged on whether payroll systems are keeping pace with tax and National Insurance changes. Some 57% of boomers said they were confident, compared with 37% of millennials.

Despite reported errors, many employees do not routinely check payslips in detail. The study found that 49% said they only skim-read or almost never look at all. HBHR said this creates scope for errors to go unnoticed as payslips become more complex.

Younger employees were more likely to skim-read their payslip. The survey found that 40% of Gen Z and 42% of millennials skim through their payslip, compared with 27% of boomers.

Communication shortfalls

The survey suggests employees do not always receive clear explanations when their pay changes from one period to the next. Only 41% said their HR or payroll system clearly flags changes to pay, tax, or deductions between payslips, while 20% actively disagreed.

Awareness of the upcoming HMRC changes also appeared limited. Only 36% of respondents said their employer had told them about the tax and payroll rule changes due in April 2026, while around 30% said their employer had not.

When asked what would improve the situation, respondents pointed to basic process and support steps alongside technology. The top two solutions were advanced communication about any changes (33%) and a named person or team for payroll questions (29%).

HBHR positions its product as an all-in-one workforce management platform covering HR, time and attendance, and payroll. It says the platform integrates with other business systems through APIs and supports UK and Irish payroll.

Callum Pennington, Chief Executive and Co-founder of HBHR, said payroll accuracy has become a frontline issue for household finances during continued cost pressures.

"Payroll has always been treated as a back office function, but these numbers make it brutally clear that it now sits on the front line of the cost-of-living crisis. When employees are missing bills because their payslip is wrong, that is not a minor admin issue - it is a systemic failure," said Pennington.

"Employees need payslips that are right the first time, clear communication about any change, and technology that makes errors visible and fixable. HMRC's changes are a golden opportunity for businesses to assess and evolve their payroll, but if they try to navigate this shift with spreadsheets or outdated systems, they risk pushing more employees into debt and driving out their best talent," he added.