What will 2026 have in store for the world of payroll? A lot can happen in 12 months, but Ciphr’s own experts, as well as payroll professionals across the UK, have gazed into their proverbial crystal balls to share their views on what 2026 might look like for the payroll profession.
Payroll trends 2025: a recap
Before dive into 2026's payroll trends, here's a refresher of the trends and challenges we predicted in 2025:
Payroll trends 2026: the big picture impacting payroll
In October 2025, we surveyed Ciphr staff and external payroll professionals to find out forecasts for the year ahead. We received nearly 100 responses – and here's what the experts had to say:
Which trends are affecting UK organisations and their payroll teams the most?
Our respondents highlighted several forces that are likely to shape payroll decision-making in 2026:
- Rising cost of business – 84.8% of respondents expect this to have a moderate or significant effect
- Rising cost to employ (NI, etc.) – 81.8%
- Rising cost of living/wage expectations – 78.8%
- AI, automation and emerging technologies – 72.7%
How will spending on payroll software change?
Do you think organisations will increase their investment in payroll technology and services in 2026?
Here's the picture when it comes to budget:
- They'll be looking to cut costs – 40% of respondents
- They'll invest more in payroll software – 27%
- They'll keep spending the same – 24%
- They'll invest more in payroll outsourcing – 9%
Which areas of payroll technology functionality or services would you expect organisations to invest more in in 2026?
Respondents told us they're prioritising investment in these areas:
- AI – 20% of respondents
- Benefits platforms – 18%
- Payroll software – 17%
- Integrated payroll and HR software – 12%
What will be the major drivers behind payroll software or outsourcing investment in 2026?
Here are the motivations we predict:
- Want to automate payroll processes and tasks – 12% of respondents
- Cost saving – 12%
- Desire for greater efficiency/to reduce manual processes – 11%
- Better analytics and reporting – 10%
Facing similar challenges? Our payroll software might be just what you need. Contact us for a conversation to explore if we’re the right match, or download our brochure to discover more about our solutions.
What challenges does 2026 hold?
Here’s what payroll experts across the UK said:
- Keeping up with AI, automation and emerging technologies – 78.8% of respondents
- Keeping pace with legislative and regulatory changes – 72.7%
- Managing payroll costs in line with rising wages and benefits expectations – 72.7%
- Integrating payroll with HR, finance and other business systems – 66.7%
1. Keeping up with AI, automation and emerging technologies
Specific challenges include:
- Rapid change of pace
- Skills gap
- Integration complexity
- Cost and ROI concerns
- Compliance risks
Solutions could be:
- Adopt a phased approach to AI and automation
- Upskill payroll teams for the future
- Choose future-ready platforms
- Run pilot projects to prove ROI
- Partner with vendors for compliance and innovation
2. Keeping pace with legislative and regulatory changes
Specific challenges include:
- Constantly evolving regulations
- Late changes without necessary guidance
- Operational impact
- Planning development and releases
Solutions could be:
- Implement regulatory monitoring
- Establish a compliance framework
- Regular training and communication
- Internal/external industry experts and advisors
- Integrate compliance
3. Managing payroll costs in line with rising wages and benefits expectations
Specific challenges include:
- Rising wage pressure from inflation and talent competition
- Higher employee expectations for benefits
- Difficulty forecasting payroll and benefits costs
- Balancing cost control with retention and engagement
- Managing payroll and tax compliance complexity
Solutions could be:
- Use salary sacrifice schemes and cost-neutral benefits
- Use a flexible benefits platform to tailor offerings
- Present Total Reward Statements at six-month reviews
- Automate and integrate HR and payroll processes
- Clearly communicate total reward and benefits value
4. Integrating payroll with HR, finance, and other business systems
Specific challenges include:
- Data silos and inconsistent information
- Complexity of legacy systems
- Compliance risks from disconnected systems
- Employee experience issues
- High cost and time for integration projects
Solutions could be:
- Real time data sync
- Transition from legacy systems to modern cloud platforms
- Automated compliance checks
- Employee self-service portals
- Phased, cost-effective integration
Want to see our payroll software in action? Request a free, no-strings-attached demo now.
Watch our 2026 payroll trends webinar:
Set your payroll department up for success in 2026
While challenges lie ahead, there are plenty of strategies payroll professionals can implement to help their departments thrive. With our payroll software, you can tackle these obstacles with confidence and get payroll peace of mind. Enjoy advanced reporting, seamless integrations and automation that will save you time and hassle – all with Ciphr’s support.
Want to learn more about empowering your payroll team in 2026? Download our brochure or book a demo today.