PAYROLL ERRORS PUSH UK WORKERS TOWARDS DEBT AMID COST-OF-LIVING CRISIS
Payroll errors and delayed wages are quietly eroding the financial stability of UK workers, forcing many households to borrow money or cut back on essential spending at a time when the cost-of-living crisis continues to squeeze disposable incomes.
New research from workforce management platform HBHR suggests the scale of the problem is growing just as UK businesses prepare for major payroll and tax rule changes due to take effect in April 2026. The findings indicate that many companies may be underestimating the financial and reputational risks associated with inaccurate or poorly communicated pay.
Drawing on a survey of 2,000 UK employees, the study highlights how payroll errors — often viewed internally as administrative issues — can have immediate consequences for employees’ ability to meet everyday financial obligations.
Nearly a quarter of workers (24%) said payroll mistakes had made it harder for them to pay rent or mortgage costs, food bills and energy expenses. One in five respondents (20%) reported that an incorrect or delayed payslip had caused them to miss a regular bill payment.
In London, where housing and living costs remain among the highest in Europe, the effects appear even more pronounced. More than a third of London employees surveyed (34%) said they had been unable to cover a bill because of payroll issues, while 31% had resorted to borrowing money — including using credit cards, overdrafts or loans from friends and family — to bridge shortfalls.
The findings also reveal a generational divide in how payroll failures are experienced.
Younger workers appear particularly vulnerable to disruption. Among Generation Z respondents, 37% said payroll mistakes had pushed them into arrears, while nearly a third (31%) reported borrowing money to manage the financial gap created by incorrect pay.
Many younger employees also lack financial buffers. Almost four in ten Gen Z respondents (38%) said they would struggle to cope if their primary salary was wrong or delayed even once, compared with 32% across the overall workforce.
The consequences for employers may extend beyond employee wellbeing. Payroll reliability increasingly appears linked to workforce retention.
According to the survey, 61% of employees said they would consider looking for a new job if payroll problems continued for six months. Among younger workers, that figure rises sharply — to 76% for Gen Z employees and 72% for millennials — suggesting payroll accuracy may play a growing role in talent retention in a competitive labour market.
Despite the financial risks involved, the research also reveals that many workers do not routinely scrutinise their payslips.
Almost a quarter of respondents (23%) said they had spotted an error on a payslip within the past year. Yet nearly half of employees (49%) admitted they only skim their payslips or rarely review them at all, meaning mistakes can remain undetected as payroll calculations become more complex.
Interestingly, younger workers appear more likely to check their payslips than older colleagues. Around 40% of Gen Z employees and 42% of millennials say they regularly scan their payslips, compared with just 27% of baby boomers.
At the same time, confidence in payroll systems appears lower among younger generations. Only 29% of Gen Z and millennial respondents said they felt very confident that their pay would always be accurate, compared with 43% of boomers.
A similar gap appears when employees are asked whether payroll systems are capable of keeping pace with evolving tax and National Insurance regulations. More than half of boomers (57%) expressed confidence in payroll systems adapting to rule changes, compared with just 37% of millennials.
The research also highlights a communication breakdown between employers and staff regarding payroll transparency.
Fewer than half of employees (41%) said their HR or payroll systems clearly flagged changes in pay, tax or deductions from one payslip to the next. Meanwhile, 20% actively disagreed with the statement, suggesting they are often left to identify discrepancies themselves.
Communication around upcoming policy changes also appears weak. When asked whether their employer had informed them about forthcoming payroll and tax rule changes due in April 2026, only 36% of respondents said yes, while nearly a third (30%) said they had not received any information.
Employees themselves are clear about the solutions they expect.
An overwhelming majority (85%) believe businesses should use modern payroll technology to reduce the risk of errors, while 72% say up-to-date systems increase their confidence that wages will be paid accurately and on time.
Beyond technology, workers also highlighted communication as a critical factor. Around a third (33%) said advance notice of payroll changes would improve trust, while 29% said having a clearly identified payroll contact would make it easier to resolve pay queries quickly.
For employers, the upcoming HMRC changes may represent a critical moment to modernise payroll infrastructure.
“Payroll has always been treated as a back office function, but these numbers make it brutally clear that it now sits on the front line of the cost-of-living crisis. When employees are missing bills because their payslip is wrong, that is not a minor admin issue – it is a systemic failure”, said Callum Pennington, CEO and co-founder of HBHR.
“Employees need payslips that are right the first time, clear communication about any change, and technology that makes errors visible and fixable. HMRC’s changes are a golden opportunity for businesses to assess and evolve their payroll, but if they try to navigate this shift with spreadsheets or outdated systems, they risk pushing more employees into debt and driving out their best talent.”
With significant payroll and tax reforms approaching in 2026, the research suggests the coming months may offer a narrow window for businesses to strengthen payroll systems, improve transparency and rebuild employee confidence before the next wave of regulatory complexity arrives.
