Are You Making These 5 Costly Payroll Data Entry Errors? (How UK SMEs Can Fix Them)

You’re staring at a pile of timesheets, a rota app, and two letters about someone’s new tax code. Payday is tomorrow. You type in the hours, adjust a salary, toggle a starter’s code—and that knot in your stomach tightens. Did you put in the right numbers? Did you miss an update?

It’s a familiar feeling. Payroll software does the calculations brilliantly, but it only calculates what you tell it. Most payroll headaches aren’t maths mistakes—they’re data entry mistakes.

The good news: it doesn’t have to be stressful. With a few simple checks, you can catch the common slip-ups before you press submit. Let’s walk through five costly data entry errors UK SMEs make—and practical ways to prevent them with confidence.

Mistake #1: Entering the wrong working hours or salary figures

One extra digit can undo a whole month—48 hours typed instead of 38, a missed overtime line from last month, or a salary change applied from the wrong date. For salaried staff, mid-month changes that aren’t pro-rated can skew pay and trigger complaints.

Because your software trusts your inputs, it will calculate perfectly—on the wrong numbers.

How to fix it:

1. Use an approved source of truth. Only enter hours from a signed-off rota/timesheet export (no handwritten notes).

2. Lock pay rates. Restrict who can edit rates and keep an audit trail of changes.

3. Run a variance check. Compare gross pay to last month and flag anything over +/-15% for review.

4. Sense-check key staff. Pick three people at random—does hours x rate = gross (allowing for overtime/allowances)?

5. Pro‑rata correctly for salary changes. Apply from the agreed effective date and check the fraction (e.g. 5/20 working days = 25%).

If a payslip jumps unexpectedly, pause and trace the line that changed before you submit.

Mistake #2: Selecting incorrect tax codes or NI categories

A new starter left without a P45, an emergency code that never got updated, or the wrong National Insurance letter chosen at setup—these small inputs change take-home pay and tax/NICs dramatically.

Common tripwires include emergency tax codes (W1/M1), using BR or 0T when 1257L was correct, missing student or postgraduate loan flags, or picking the wrong NI letter (A is standard; M for under 21s, H for apprentices under 25, C for employees over State Pension age).

How to fix it:

1. Collect the right starter data. Use the HMRC starter checklist if there’s no P45, and record student/postgrad loan status.

2. Choose the NI letter deliberately. Check age and apprenticeship status—don’t guess.

3. Replace emergency codes promptly. Set a reminder to revisit any W1/M1 code when the P45 arrives.

4. Run a “tax code changes” report each month and review any net pay swings over £100.

5. Use built‑in validation. Let your payroll software (or HMRC Basic PAYE Tools) warn you before you finalise.

Mistake #3: Failing to add/remove employees and update records promptly

Nothing upsets staff faster than missed first pay or an extra payment after someone leaves. Delays in setting up joiners, marking leavers, or updating bank details cause wrong payments, pension issues, and HMRC mismatches.

It’s easy to assume “I’ll tidy that next month.” In payroll, next month is too late.

How to fix it:

1. Use a mandatory new‑starter form. Capture legal name, address, DOB, NI number, bank details, P45 or starter checklist, tax code, and loan status.

2. Set a cut‑off rule. If a joiner isn’t fully set up 2 working days before payroll, they roll to the next run (and you tell them early).

3. Process leavers immediately. Enter the leave date, pay outstanding holiday, stop regular deductions, update pension status, and issue the P45.

4. Log changes in one place. Any change to hours, rate, role, or bank details must be requested and approved in writing.

5. Keep a shared starters/leavers register so HR/managers and payroll see the same information.

Mistake #4: Overlooking statutory payments (sick, maternity, paternity, adoption)

Statutory Sick Pay (SSP) and parental pay (SMP, SPP, SAP) are often missed because the key dates and flags never make it into payroll. The software can calculate the amounts—but only if you enter the absence/leave dates, the correct reference period, and confirm eligibility.

If those inputs aren’t there, employees don’t get what they’re entitled to, and you may lose recoverable amounts.

How to fix it:

1. Capture dates and evidence early. Record sickness/leave dates and collect required documents (fit notes, MATB1).

2. Enter the statutory type and start/end dates. Check waiting days for SSP and set the qualifying week/reference periods for parental pay.

3. Check Average Weekly Earnings meet the threshold. Your software can calculate it when the correct pay periods are selected.

4. Run a statutory pay report to confirm amounts and any recoveries (including Small Employers’ Relief, if applicable).

5. Tell employees what to expect (and when) so payslips match the story you’ve explained.

Mistake #5: Forgetting workplace pension updates

Auto‑enrolment is not “set and forget.” Employees cross age/earnings thresholds, postponements expire, people opt in or out, and contribution rates change. If those updates aren’t entered, you can under‑ or over‑deduct and fall out of compliance.

Even with great software, if assessments aren’t run and decisions aren’t recorded, the calculations won’t be right.

How to fix it:

1. Assess every pay period. Enrol newly eligible staff promptly and send statutory letters within 6 weeks.

2. Process opt‑ins and opt‑outs on time, and refund contributions within the required window after an opt‑out.

3. Check contribution rates match legal minimums and scheme rules. Review salary sacrifice settings where used.

4. Align payroll and provider definitions of pensionable pay (qualifying earnings vs basic pay).

5. Diary your 3‑year re‑enrolment and complete The Pensions Regulator re‑declaration on time.

Why These Mistakes Keep Happening

Most data mistakes start before payroll even opens. Hours arrive from a rota app, changes come in via email, and you rekey details across HR, payroll, and pension portals. In the rush to hit payday, tiny inputs slip through.

It’s also tempting to think “the software will catch it.” Payroll systems are brilliant at calculations, but they don’t know if the hours, codes, or dates you entered are right. In other words: garbage in, garbage out.

And when you wear multiple hats (ops, HR, finance), context gets lost. Without simple, standardised checklists and clear cut‑offs, errors become inevitable.

Prevention: Your Path Forward

Software automates the calculations—but accuracy depends on your inputs and checks. You don’t need to become an expert overnight; a simple, repeatable process is enough to catch most issues.

Try this 10‑minute pre‑submit checklist:

1. Hours and rates: compare gross pay to last month; investigate variances over +/-10%.

2. Starters/leavers: confirm everyone due to be paid is set up, and leavers have a leave date and correct final pay.

3. Tax and NI: review a tax code/NI letter report; confirm any emergency codes and student/postgrad loans are correct.

4. Statutory pay: check any sickness or parental leave has dates and flags set, and AWE looks sensible.

5. Pensions: run assessment, enrol new eligibles, process opt‑outs/opt‑ins, and review contribution rates.

6. Bank details: spot‑check a few changes against written requests.

7. Deductions: verify attachments/child maintenance are active and correct.

8. Payslip sense‑check: open three random payslips—do the numbers tell the story you expect?

9. Approvals: ensure changes (rates/hours) have manager sign‑off.

10. Lock and back up: close the period to prevent late edits and save your reports.

If specialised tools aren’t in budget yet, build standard forms (starters/leavers/hours), set clear cut‑offs, and use a second‑person review. The small time you spend upfront saves far more in corrections, complaints, and penalties later.

Remember, seeking help with payroll isn't a sign of business failure: it's a sign of business growth. As your company expands and your payroll becomes more complex, recognizing when to bring in professional support demonstrates smart business thinking.

The five mistakes we've covered today are entirely preventable with the right systems and processes in place. Your future self (and your bank account) will thank you for addressing them now, before they become expensive problems that demand immediate attention.

If you're feeling overwhelmed by payroll compliance or want to explore professional payroll support, our team is here to help you create a payroll system that works reliably, month after month.