How to change payroll provider: Guide to switching

Paying your employees the right amount at the right time shouldn’t bog down your week. If that's the case, you may want to consider switching payroll providers. With the right payroll software, you can simplify the process, save time, and make tax compliance smooth and easy, month-to-month and year-to-year.

Read on to get the lowdown on how to switch payroll software – even if you’re in the middle of a tax year. Don’t let looming deadlines delay your switch and discover everything you need to know about changing payroll providers, even when your business is in full swing.

How to change payroll system: In summary

• While the smoothest route may be aligning your switch with the new tax year, changing providers mid-year can often be easy, clean and routine with the proper data reconciliation.

• Exporting complete employee records—including Year-To-Date (YTD) figures for Income Tax and National Insurance contributions (NICs)—is essential for continuity.

• Running a parallel pay run on both platforms before go-live is an essential operation to avoid discrepancies early without interrupting employee pay.

Why switch payroll software provider?

No one payroll software tool is the same, and there are several reasons why you may want to change payroll platforms.

• Scale. Your company may have grown to a size where your current provider can’t cope.

• Functionality. You find the software difficult to use or not intuitive to your business’s needs. Your current payroll software may be clunky or offer only limited features or payroll reporting.

• Support. You feel unsatisfied with the level of customer service or their response times. You might also be looking for more comprehensive UK-based support that offers both phone and online channels.

• Value. Your current payroll software may no longer be providing good value for money, or there could be a lack of transparent pricing tiers for features like recurring payslips or end-of-year filings.

• Integration. Being able to connect payroll straight to central accounting ledgers and digital time-tracking apps would save you time and effort.

When is the best time to change payroll software?

Changing payroll providers can feel daunting – as though there’s always a more convenient time to switch than right now. Here are the best times to change your payroll software – but remember, you can do it whenever you want provided there’s the right process, a considered plan, and an appropriate solution.  

Changing payroll provider at the start of the tax year

Generally, the start of the tax year marks the ideal time to change payroll providers. The new tax year kicks off on 6 April each year and runs until 5 April of the following year. 

Switching to a new payroll software around this time is a sound choice for a few reasons:

• You’ll have a few weeks between the end of the tax year and April’s month-end payroll to switch payroll providers. This should be enough time to let everyone know about the move, and to train the relevant members of your team about how the new software works.

• You won’t have to carry over any historical data from the previous tax year into the next one. The business gets a clean break, and you don’t have to worry about compatibility issues (or human error) from information swapping between incompatible platforms.

• It’s simple to incorporate changes to tax thresholds. Each year, the UK government announces several changes to tax thresholds, rates and codes. By swapping payroll companies at the start of the new tax year, you can easily incorporate any changes.

Changing payroll provider at the mid-year point

Changing payroll providers mid-year might not be as easy, but it needn’t be daunting. While you can talk to your new payroll provider for support in the process, but there are a few things to look out for:

• The first thing you’d need to check is whether there is cross-compatibility between the two providers, so you can import any historical data from the current tax year automatically. The last thing you want is to be entering all values manually. Even if you have a relatively small workforce, this increases the risk of errors with any data you input.

• You will also want to carefully manage your timelines. Crossover between the two payroll companies could cost you extra, as you’ll be paying for access to two sets of software at the same time. Managing the timeline well will also help prevent the production of duplicate filings.

• Make sure that there is nothing in the small print that might incur additional costs to your bottom line (like a 30-day notice period from your old provider), or something that might disrupt the upcoming payment run in any way.

Luckily, most payroll companies do what they can to make switching mid-year as easy as possible, so chat with your new provider about what support they offer.

Switching payroll provider: Step-by-step process

If you’re looking for a more streamlined payroll company, our checklist for switching providers can help you make the right decision. Here’s how to change to a payroll that works for you.

Step 1: Identify what payroll software you need

This will help you understand what isn’t currently working, what you want to change and, as a result, what you want to see from your new payroll provider. For example, you might want software that integrates fully with the rest of your accounting software.

Before deciding on a new payroll provider, ask yourself the following questions:

• Does the new provider provide good value for money?

• Is the software suitable for the size of my company?

• Will you have enough access to reliable customer service?

• Is the software easy to use and intuitive to your needs?

• Have I discussed this with my accountant? 

Step 2: Review any contract terms and notice periods

Check for information about cancellation terms so you understand any costs involved. Some software providers might be very flexible, while others might come with a fee for cancelling early that will impact when you want to make the switch.

Step 3: Bring together essential employee and employer records

To ensure a successful system migration, it’s essential to bring together core business information. You should export the following information, and ensure that it is accurate, consistent and complete:

• PAYE and Accounts Office Reference

• Complete employee records, including tax codes, student loan details, and YTD balances.

Step 4: Set up and configure your new payroll system

Follow the instructions provided by your new payroll company. They will likely need:

• Business information such as your employer PAYE reference number and number of employees

• Employees’ details including their national insurance numbers, tax codes, start dates, student loan information and other details

• Payroll records such as all salary and wages payments, staff leave and absences, copies of all PAYE coding notices (P9T) which have been received, BiK information, employee contributions etc.

When the agreed date comes, migrate all your data across. Utilise support available from your new provider to make the process as smooth as possible.

Step 5: Carry out a parallel pay run

A parallel pay run is a testing step, in which you do a synchronised test run of both your old and new software for the same pay period. This helps to ensure matching results and will reveal if the new system is incorrectly calculating information, if the information has been transferred correctly, and helps you fix potential issues early. 

To perform a parallel pay run:

• Reconcile your gross pay, Income Tax, NICs, and net output.

• Go line by line and verify that each system’s outputs/results match.

Step 6: Notify your employees and roll out portal access

While anyone involved directly with payroll will already know, it’s a good idea to send out a company-wide email or notice so the whole business is aware of the change.

This will help to prevent any confusion, such as payslips looking different, and ensure you’re being as transparent as possible with your team. You can also communicate any new self-service portal log-in details.

Step 7: Finalise reporting and archive important historical data

When you change payroll providers, you must ensure that final Full Payment Submissions (FPS) are sent for your last pay run on the old system:

• Verify your final payroll calculations.

• Send the final FPS on or before the pay date.

• Submit any relevant correspondence before switching and then download historical reports for your compliance records. 

Remember, don’t accidentally resubmit or duplicate data for finalised pay periods in your new software.

Common mistakes made when changing payroll system

There’s a range of common mistakes some businesses can make when they change payroll providers, though fewer errors than you might think are due to the software itself.

There are several pitfalls that organisations and HR managers can easily come across, and avoiding these can help with a smooth transition, prevent pay delays, and keep statutory records clean.

Not telling your stakeholders

Before any major software transition, you must ensure to secure buy-in from all stakeholders – whether that’s your employees, directors or accountants. The last thing you want is to have to switch back to an inferior payroll platform because your stakeholders have concerns with the new platform.

Not choosing HMRC-compliant software

Payroll software that is compliant with HMRC makes the payroll tax process so much easier. Check how well your new software integrates with HMRC payroll compliance requirements before committing to the switch.

Migrating low-quality data

Migrating inaccurate Year-To-Date (YTD) balances for Income Tax, National Insurance Contributions (NICs), or statutory pay into your new software can cause issues down the line. By entering incorrect starting totals, you might cause a series of calculation errors on future pay runs.

Avoiding the parallel pay run

Diving straight into a live payroll processing run without running a side-by-side test across old and new systems isn’t best practice. Skipping this step makes it harder to spot data entry mismatches well in advance of employees receiving their net wages.

Not being able to connect to other software

One extremely useful aspect of many payroll tools (QuickBooks included) is the ability to connect to other software, such as online banking. This enables a seamless flow of data between the platforms, aiding accuracy. 

Forgetting to sync pension schemes

Failing to reconnect your workplace pension scheme or auto-enrolment details during setup might lead to tricky issues. It could cause missed employer contribution submissions or incorrect percentage calculations for qualifying income.

Neglecting notice periods and data retention

If you exit your old software agreement before downloading important information such as historical payslips, P60 summaries, and P32 records, data can become difficult to rectify later. You are legally required to retain payroll records for six years – that’s why it’s essential to create a robust archive before closing your outgoing account.

Not planning enough time for the switch

While QuickBooks aims for a quick switch from your old provider, you must ensure that your switch does not overlap with a payment period. Switching after a month’s payment period will help make sure that the switch is completed before the next payday.

Make changing payroll providers simple with QuickBooks

Don’t get swept away in your switch – QuickBooks makes it easier for small and medium-sized businesses to change payroll providers. Switch payroll platforms easily with simple data import tools and dedicated onboarding support. 

Connect your new payroll software directly to your main account ledger to help with compliance, reduce manual spreadsheet errors, and get complete visibility over total labour costs. Make your switch today.

Learn more about QuickBooks for payroll.

Switching payroll system FAQs

Can I change payroll providers mid-tax year in the UK?

Yes, you can change payroll providers mid-tax year, whether that’s 3, 6, or even 10 months in. While it’s not a straightforward as changing in the new tax year, it’s often not as tricky as many expect. However, to make switching payroll systems mid-tax year work, you need to accurately transfer employee Year-To-Date (YTD) figures for Income Tax, NICs and pensions into your new software.

How long does it usually take to switch payroll software provider?

The length of time it takes to switch payroll software provider varies from businesses to business, and provider to provider. Generally, for most small businesses, it takes about two to six weeks to complete the switch. The main things that impact the duration of a switch include employee headcount, contract notice periods, and data preparation. 

How does QuickBooks simplify data import when changing payroll software? 

QuickBooks streamlines setup using an FPS importer tool that automatically extracts your core business details—including your PAYE reference, address, and pension contribution parameters—alongside complete employee records like tax codes, dates of birth, and National Insurance numbers. Our software automatically integrates annual HMRC updates like tax code changes and statutory rates, which only need a quick final review before your first pay run. 

Does changing payroll provider disrupt employee pay?

While there is a risk that you could disrupt your employee’s pay if you don’t change payroll providers correctly, if you plan things intelligently then things can go without a hitch. While the best time to switch is at the start of a new tax year, QuickBooks can help you swap – even if that’s in the middle of an active tax year.

What information do you need to switch payroll providers?

If you’re planning on changing payroll providers, you should gather the following information:

• Business information, such as PAYE reference numbers and your Accounts Office reference.

• Employee records, including full names, dates of birth, addresses, tax codes and NI numbers.

• YTD figures, including gross pay, tax paid, and pension contributions for each employee.

You may also be required to notify HMRC as well.

The information on this website is provided free of charge and is intended to be helpful to a wide range of businesses. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. Any reliance you place on information found on this site or linked to on other websites will be at your own risk.

This information is intended to outline our general product direction, but represents no obligation and should not be relied on in making a purchasing decision. Additional terms, conditions and fees may apply with certain features and functionality. Eligibility criteria may apply. Product offers, features, functionality are subject to change without notice.