The payroll software features your practice should prioritise in 2025

This content is brought to you by Xero.

Whether it’s flexible working patterns or new tax rates coming into place, payroll changes more than you might think. That’s why practices need a payroll system in place that can handle the changing work and tax landscape – for friction-free pay runs every month.

Here’s what you should look for in payroll software for 2025 and beyond.

1. Cloud-based payroll software

Desktop software restricts you to a single device or license. But cloud-based software offers an alternative that lets users complete payroll tasks from anywhere, on any device.

Cloud-based software typically comes with automated updates that align the system with new regulations, making it easier to comply with payroll rules. There are no costly user licenses with cloud-based software, either. With Xero payroll software you get unlimited users, so you can delegate tasks across your team and clients.

2. AI and automated payroll

Modern payroll systems provide features like automated calculations for pay and deductions, fraud detection, and accounting software integration.

Integrated accounting and payroll software saves you time with automated journal entries for every pay run. Xero payroll software gives you automatic calculations for pay and deductions, updates in line with regulations, and journal postings. Plus, Real Time Information (RTI) submissions are sent to HMRC after every pay run, automatically.

3. Real-time payroll and digital payments

With real-time payroll processing, data is pulled into the software throughout the month, with pay and deduction calculations constantly updated. This means you can see the latest payroll information at any time. 

Combine this with digital payments, and processing payroll is even simpler. Modern software lets you clients connect bank accounts and pay their employees in a few clicks. With Xero, payroll data is pulled through in real time. Clients can also pay their team with BACS or a faster payments file for speedy pay runs. 

4. Payroll software security and compliance

Today, payroll software has multiple layers of security to keep information safe – things like encryption, two-factor authentication, and customisable permissions.

Practices also need to adjust to changing payroll legislation, updates to pay and tax rates, plus broader reporting requirements changes. This is easier when payroll software automatically updates for you. Xero payroll software makes automatic changes where required – increasing tax codes and carrying authorised ones over.

5. Payroll apps and self-serve features

The growing number of payroll apps means staff can self-serve – submitting timesheets, making leave requests, and managing their payslips on their smartphone. You and your clients no longer need to hand out payslips or coordinate annual leave, and teams get transparency over their working schedules. Xero payroll software comes with Xero Me, an app that lets staff manage timesheets, payslips, annual leave, and expenses.

Why Xero payroll software is the right choice in 2025

Make every pay run go smoothly with:

• Automatic updates, RTI submissions, tax code updates, and centralised data storage.
• Multiple layers of protection including encryption, two-factor authentication, and customisable permissions.
• Xero Me, our self-serve app for staff to track their leave, submit requests and timesheets, manage their payslips, and submit receipts for reimbursement.

Xero payroll software gives you the tools to support every type of client and their workforce.

This content is brought to you by Xero.

Xero offers a cloud-based accounting software platform for small and medium-sized businesses..