How to switch payroll providers in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
Switching payroll providers is straightforward in principle: you transfer employee records, payroll history and HMRC reporting obligations from one provider to another, ideally between tax years to keep things clean — though a mid-year switch is entirely workable if you follow the right steps.
Decide when to switch
The cleanest time to switch is at the start of a new tax year (6 April), before any pay runs have been processed in that year. Your new provider starts with a blank slate and there is no mid-year data to migrate.
A mid-year switch is common and manageable, but it requires your new provider to load year-to-date (YTD) figures for every employee — gross pay, tax deducted, National Insurance contributions and pension contributions to date. Without accurate YTD data, tax codes will produce the wrong deductions and employees may end up over- or under-taxed.
If you are switching mid-year, give yourself at least four to six weeks of overlap before your first live pay run with the new provider.
Gather everything before you move
Before you hand anything over, collect the following from your outgoing provider:
- Employee records — names, addresses, dates of birth, National Insurance numbers, start dates and employment terms
- Tax codes — the current code in use for each employee, ideally confirmed against HMRC's records via PAYE Online
- Year-to-date payroll data — gross pay, taxable pay, tax paid, employee and employer National Insurance contributions, statutory payments (SSP, SMP, SPP and so on), and pension contributions
- Previous Full Payment Submissions (FPS) — copies or confirmation that all submissions are up to date under Real Time Information (RTI) rules
- P45s if relevant — for anyone who has left during the current tax year
- Pension scheme details — your employer reference with your pension provider, contribution rates, and the basis on which qualifying earnings are calculated
Under RTI, you must submit an FPS on or before each payday. Make sure your outgoing provider has filed every submission correctly up to the point of handover. Any gaps become your problem — HMRC will chase the PAYE reference, which stays with your business, not with the provider.
Set up with your new provider
Your new provider will need to be authorised to act on your behalf with HMRC. This typically means adding them as a payroll agent on your PAYE Online account. You will need your PAYE employer reference and Accounts Office reference to hand.
Your new provider then loads the YTD figures, applies the correct tax codes, and configures your pension scheme — including the auto-enrolment minimum of 3% employer and 5% employee contribution on qualifying earnings. If you have a staging date or re-enrolment date approaching, flag this early so it is not missed.
Run a parallel payroll for at least one period if you can — process the pay run with both old and new providers and compare outputs line by line. It takes extra time but catches data-migration errors before they affect employee pay or an RTI submission.
Keep HMRC informed
HMRC does not need to be formally notified that you have changed providers — your PAYE reference does not change and RTI submissions continue as normal. What matters is that there is no break in submissions and no duplicate FPS filings for the same period.
If your outgoing provider submitted an FPS for a pay period that your new provider also submits, HMRC will see duplicate figures and your PAYE account will be wrong. Agree a clean handover date: the outgoing provider files up to and including pay period X; the new provider files from pay period X+1.
Your year-end obligations stay the same regardless of provider. P60s must be issued to all current employees by 31 May. If any employees received benefits in kind, P11Ds must be filed by 6 July. Make sure it is clear in your contract with the new provider who is responsible for these — it is usually whoever is running payroll at the point the deadline falls.
Common mistakes to avoid
Not checking tax codes. Codes issued by HMRC are held at the employer level, not the software level. If your new provider loads a code that is out of date, employees on the wrong code could pay the wrong tax from day one. Cross-check codes against HMRC's PAYE Online before the first live run.
Underestimating data quality. If your outgoing provider's records are messy — incorrect NI numbers, missing YTD figures, unreconciled pension contributions — clean them up before migration, not after.
Forgetting the Employment Rights Act 2025. Day-one rights have been strengthened, which affects how you onboard and pay new starters. Your new provider's system should reflect current statutory requirements, not legacy rules.
Leaving it too late. A rushed migration with one week's notice almost always results in a delayed pay run or an incorrect FPS. Build in enough time to check, query and recheck before employees are paid.
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