Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer The costliest payroll mistakes are filing the Full Payment Submission late, using the wrong tax code, forgetting the Employment Allowance, missing pension auto enrolment duties, and paying HMRC late. Each is avoidable with a reliable monthly process.

The mistakes that cost the most

  1. Filing the FPS late. It must reach HMRC on or before payday, not after. Late submissions build up penalties.
  2. Using the wrong tax code. A stale code from an old P45 can leave staff badly over or under taxed.
  3. Forgetting the Employment Allowance. Many small employers pay employer National Insurance they could have reduced by up to £10,500.
  4. Missing auto enrolment duties. Pension duties apply from the first eligible employee, not once you reach a certain size.
  5. Paying HMRC late. Tax and National Insurance are due by the 22nd of the following month if paying electronically.
  6. Getting starters and leavers wrong. Missing a P45 or new starter checklist causes code and tax errors.

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Frequently asked questions

What is the most common payroll mistake?

Filing the Full Payment Submission after payday. It must reach HMRC on or before the day you pay staff, and late submissions build up penalties under real time reporting.

What happens if I use the wrong tax code?

An employee can be badly over or under taxed. Over taxing frustrates staff, while under taxing stores up a bill. Always use the code from a P45 or the new starter checklist.

What is the Employment Allowance mistake?

Many small employers forget to claim it and overpay employer National Insurance by up to £10,500 a year. It is claimed through your payroll software.

When do I have to pay HMRC?

By the 22nd of the following tax month if you pay electronically, or the 19th by post. Late payment brings interest and penalties.

Do pension duties apply to small employers?

Yes. Auto enrolment duties apply from your first eligible employee, not once you reach a certain size, and getting them wrong brings penalties from The Pensions Regulator.