The Impact of Brexit on Payroll Management for UK Businesses: Four Years On

It’s been four years since the UK’s exit from the EU on 31st January 2020. Yet the impact of Brexit on payroll management for UK businesses remains significant. With several changes now fully integrated into daily operations, businesses are continuously adapting. And, that’s certainly true of the evolving payroll landscape.


Regulatory Changes and Compliance


The post-Brexit era has naturally seen a shift from EU to UK-centric regulations. So, that has affected how payroll is managed. This change has had mixed implications. While it offers more autonomy in shaping payroll policies, it also brings the challenge of ensuring compliance with new UK-specific laws. The introduction of a points-based immigration system has particularly impacted how businesses handle payroll for non-UK employees. This is because it has mandated the need for additional checks and documentation.


The good news is that payroll management software developers have been proactive. They have updated their platforms to include features that assist in managing the additional checks and documentation required for non-UK employees. These features often include automated reminders for visa expiry dates, integration with Right to Work checks, and reporting capabilities to support compliance with Home Office requirements.


Accountancy practices have also adapted by offering specialised services to help businesses navigate the new immigration landscape. These include ensuring payroll compliance, and providing advisory on best practices for managing an international workforce. These software solutions and expert services help businesses stay on top of the regulatory demands and maintain a smooth payroll operation.


Workforce and Payroll Adjustments


In the wake of Brexit, the UK’s workforce dynamics have indeed shifted as expected. Interestingly, this has created both challenges and opportunities for payroll management. The end of free movement has meant a transition to a workforce that relies more heavily on domestic talent. While this shift has simplified the management of multinational payroll systems by reducing jurisdictional complexity, it has also narrowed the talent pipeline, putting pressure on local sourcing of skills. This pressure could lead to an uptick in recruitment drives and associated training expenditures to fill skill gaps.


To mitigate these challenges, HR software developers have enhanced their platforms to streamline the recruitment and onboarding processes. We are now seeing an influx of integration tools for skills tracking and compliance checks specific to the UK’s employment laws.


In this area too, accountancy firms have also stepped up. Offering consulting services to navigate these new workforce structures, we are seeing an increase in accountants advising on compensation strategies to attract UK talent, and optimising training investments. These strategic moves are not just about compliance but also about gaining a competitive edge in talent management post-Brexit.


Technology and System Upgrades


As already alluded to above, to accommodate the many post-Brexit changes, businesses have invested in upgrading payroll systems. Advanced software now offers features tailored to new regulations, simplifying some aspects of payroll management. It can not be overstated that the initial transition to these systems was a challenge for many businesses. However, experts in the field (like us) have been quick to adapt to learning new software inside out so that we are in the prime position to implement, train and strategise as business’s require. As such, there has been a real shift in the role accountants now fill!


Lessons Learned and Strategic Insights


Businesses have learned valuable lessons in agility and compliance. The need for regular updates on legislation and adapting payroll processes quickly has been a crucial takeaway. Some have found the new regulatory environment more straightforward, while others struggle with the complexities. The new immigration rules, for example, have been particularly vexing for many!


Using Brexit Changes to your Payroll Advantage


So, what can we learn four-years on from Brexit with regards to payroll. Well, firstly, we have been through much of the ‘pain’ barrier leaving the EU meant. As such, there is greater understanding, and more system offerings to help alleviate the difficulties faced in the immediacy of the UK’s exit from the EU. This means, that we have witnessed first-hand how versatile our businesses are; and how industries pull together to meet needs when need must! The fact that we are now seeing some incredible, and undoubtedly revolutionary, systems to help streamline payroll operations, ensuring compliance while also exploring new opportunities for workforce management and cost-efficiency has been born out of the need Brexit caused. So too, we are beginning to see improved business decision-making from payroll data as a result of those new systems on offer, turning the Brexit-related changes into strategic advantages.


In brief…


The impact of Brexit on payroll management for UK businesses has unquestionably been multifaceted. While it has introduced complexities, particularly in terms of compliance and workforce management, it also presents opportunities for businesses to streamline and optimise their payroll systems. Accountancy firms, like ours, have played (and will continue to play!) a crucial role in helping businesses navigate these changes, ensuring that payroll management remains a robust and compliant aspect of their operations.

If you’d like to speak to one of our experts about, please call 01243 782 423, or email from our contact page and we will be in touch!

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