Top payroll industry trends shaping the future 

The world of payroll is changing fast, and 2025 is shaping up to be a pivotal year.

Whether you’re a business owner, HR professional or payroll specialist, staying ahead of payroll industry trends has never been more important.

Especially as technology is evolving, employee needs are shifting, and a new UK Government is introducing major changes.

1) Better understanding if Artificial Intelligence (AI)

This wouldn’t be a 2025 trend list without talking about Artificial Intelligence (AI).

In recent years, AI has seen large-scale interest, with many looking at how it can support payroll, pensions and reward initiatives.

However, as the buzz around AI continues to grow, so does the sharing of misinformation.

Often, AI and payroll automation are confused, with the Chartered Institute of Payroll Professionals (CIPP) finding that almost half of respondents were unable to tell the difference.

AI is a technology that tries to simulate human intelligence.

In contrast, automation simply computerises processes normally carried out by humans, helping you execute repetitive and laborious tasks.

Additionally, the CIPP found that over a third of respondents are worried about the impact of AI on their roles.

Technological advancements won’t replace jobs, rather they will change and enhance the positions, enabling payroll professionals to take a more strategic role.

Moving into 2025, as technology such as AI begins to mature, we expect a shift in the industry, with better adoption of technology as a whole and a firmer understanding of the payroll software on offer.

However, not only do we expect a better understanding of AI and automation, but we predict businesses will capitalise on both tools, using them in sync for enhanced time-savings.

2) International capabilities are becoming an increasingly common need 

The job market has forever changed, with more employees looking for flexible working abroad, businesses attempting to tackle the skills shortage with overseas hires and companies expanding to new territories.

However, all these situations make payroll much more complex.

In 2025, a number of those managing payroll will need to consider various factors such as local tax laws, compliance regulations, exchange rate fluctuations and differing labour laws in each region.

For those businesses with dedicated payroll professionals and expertise, to tackle this increasing demand, leveraging technology will be key.

Cloud payroll software that supports international compliance can make managing processes smoother and more transparent.

However, the complexities may be too much for many, and as such, we advise exploring payroll outsourcing solutions, ensuring that your business remains compliant.

3) Increased adoption of Earned Wage Access (EWA)

A payroll trend the CIPP noted was an increase in financial wellbeing initiatives such as pay on-demand, also known as Earned Wage Access (EWA).

Pay on-demand/EWA provides employees access to a percentage of the pay they have earned before their usual payday.

While the total number of businesses offering this remains relatively low, the CIPP found the number of payroll departments making payments between paydays more than doubled.

EWA offers an interesting concept, with some hailing that it can support staff with emergency payments and cost-of-living increases.

However, as highlighted by the CIPP, critics argue these initiatives do not address poor financial states and bad spending habits.

Of course, whether this is offered comes down to each individual business; however, we would urge businesses to also consider financial education, helping staff improve their overall understanding.

While improved financial understanding won’t resolve unexpected financial demands, it can help enable better decisions, and if you did opt for on-demand pay, hopefully, the implementation would be more successful.

4) Increasing pressure following Government reforms

The new UK Labour Government will dictate a lot of workplace change, impacting payroll professionals.

As such, in 2025, businesses must keep up with radically different legislation, ensuring their payroll is correct and compliant.

A few notable changes that are expected, include:

Changes to National Insurance (NI) contributions

Employer National Insurance Contributions will increase from 13.8% to 15% on a worker’s earnings above £175.

The threshold at which businesses start paying National Insurance (NI) on workers’ earnings is also lowering from £9,100 per year to £5,000.

Ending zero-hour contracts

Labour aims to tackle exploitative zero-hour contracts, putting an end to ‘one-sided’ flexibility and aiming to guarantee people working hours if they want them.

Following the change, people will have a contract reflecting the hours they truly work, with Labour suggesting using a 12-week reference period to determine these hours.

However, workers can request to remain on a zero-hour contract if that is their preference.

Minimum wage changes

The Minimum Wage was initially introduced by the Labour Government.

They now wish to ‘go further’ and increase the Minimum Wage to ensure people can truly live on it.

To achieve this, Labour has stated it will change the Low Pay Commission’s remit so that alongside the median wages and economic conditions, the Minimum Wage will for the first time reflect the need for pay to take into account the cost of living.

Additionally, plans have been proposed to remove the age bands, ensuring every adult worker benefits.

Additional support: frequently asked questions (FAQs)

Will employee NI increase in 2025?

Yes, in the upcoming 2025/26 tax year, Employer’s National Insurance Contributions (NICs) will rise from 13.8% to 15%.

What are the new NI rates for 2025? 

Employer’s National Insurance Contributions (NICs) will increase by 1.2%, taking it to 15%.
The Employer’s NI Secondary Threshold will also decrease from £9,100 to £5,000. 

What is the SSP for April 2025? 

Statutory sick pay (SSP) will increase to £118.75 per week (up from £116.75). 

What is the Employment Allowance (EA) 2025 26? 

Employment allowance will be increased from £5,000 to £10,500 per year. Also, the current eligibility threshold that restricts the employment allowance to smaller employers will be removed. 

Will payroll be replaced by AI? 

No, while AI can support many tasks, it will not replace payroll professionals. Instead, we expect it to help with time-consuming tasks, freeing up professionals to focus on more strategic work.

How is AI used in payroll? 
AI helps with handling payroll data, minimising the risk of human error and speeding up processes. AI technology can enhance:

• Efficiency
• Accuracy
• Data management
• Data collection

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Our ISO accredited payroll firm offers a range of payroll services which ensure payroll accuracy, while our bespoke payroll software lets you consolidate your payroll processes into one simple and efficient workflow.

For more information simply request a payroll quote or call +353 (0) 1 905 9400.