Switching payroll provider feels more complicated than it is — which is why many businesses stay with a provider they’re not happy with longer than they should. Done properly, a switch is straightforward and creates no HMRC issues. Done carelessly, it can leave gaps in RTI submissions, incorrect year-to-date figures, and a confused HMRC record.

Here’s how to do it right.

Choose the right time to switch

The cleanest point to switch is at the start of a new tax year — April — because year-to-date figures reset and there’s no history to carry over. But you don’t have to wait. A mid-year switch is perfectly manageable as long as year-to-date figures are transferred correctly.

Avoid switching in the middle of a complex month — statutory maternity or paternity pay in progress, a bonus run, or a CIS return due — unless you’re confident the handover is well managed.

What your new provider needs

A good incoming provider will ask for: year-to-date figures for every employee (gross pay, tax, NIC, pension contributions), employee starter details and tax codes, your HMRC PAYE reference and Accounts Office reference, pension scheme details and contribution rates, and any outstanding statutory pay calculations in progress.

If your current provider is reluctant to share this information, that’s a red flag — this data belongs to you, not them.

What to check before the first run

Before the new provider runs their first payroll, confirm that year-to-date figures match what was submitted to HMRC by the previous provider. A simple sense-check against your last RTI submission prevents the most common mid-year switch problems.

Also confirm that the new provider will be submitting RTI as your HMRC agent — and that the previous provider has removed themselves. Having two agents active simultaneously causes confusion on the HMRC portal.

What about Xero?

If you use Xero, make sure the new provider understands how payroll journals should be posted — not just that they’ll produce them, but that the coding matches your existing chart of accounts. A switch is a good opportunity to get this right if it hasn’t been previously.

The honest answer on timing

Give yourself four to six weeks from decision to first run. That’s enough time to gather the information, sense-check the figures, and brief the new provider properly — without rushing anything that could cause an HMRC problem.

Thinking about switching? We manage the handover as part of our onboarding — get in touch and we’ll tell you exactly what’s involved.