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HMRC users & Auto Enrolment: Manual vs Automation

26th Aug 2015
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The Pensions Regulator (TPR) plans to release a basic AE tool kit to help HMRC Basic PAYE tool users to help process auto enrolment (AE). Currently these users do not have the functionality or facilities to process AE.

The question remains whether this tool will only add to current worries and stresses about auto enrolment or will it actually help HMRC users?

While HMRC users want an easy to use and innovative solution, this AE tool will require a lot of manual effort. It will assist with employee assessment and contributions but there are many of the mandatory AE duties not cater for. The tool works by downloading an Excel spreadsheet where all the data will be stored and processed by the user. This format will be far from seamless or flawless.

The new tool will not:

  • handle auto enrolment communications
  • produce payslips with pension contributions
  • handle multiple pay frequencies
  • process postponement or handle postponement communication letters
  • handle employees on different pay frequencies
  • automate re-enrolment
  • process variable contribution levels
  • produce auto enrolment/contribution files for the various AE pension providers.

There is also the limitation in that the tool only supports 15 employees. There are, however, some work arounds. For example, users can set up multiple versions of the AE toolkit to handle multiple pay frequencies. The majority of HMRC users will really want to avoid this additional work and time consuming effort. A major issue for these users is the decision to process AE manually or to use payroll software to automate the AE process.

Manual Processing

Manual data entry does introduce the possibility of human error. Anyone who lacks concentration or  does not pay close attention to detail may make more errors. Not only is this very time consuming and costly but is also frustrating. We all know that errors occur frequently when it comes to dealing with numbers and manually entering data into a computer.

Errors can also consumes additional time and staff resources to identify and correct. With such important information to enter, users will make mistakes that can have consequences. The problem also being that despite what some of us think, people are not perfect, however much each of us wishes we were.  Using a manual system may seem like you are saving, it does represents a false economy for your business.


It is not a legal requirement to use software to process AE, however TPR actively encourages employers to use payroll software that can automate these tasks. HMRC users who have decided to use payroll software have saved considerable time and effort. Automation has allowed these adopters to simply enter their staging date and the software automates the AE process, from staging to pension file submission.

It is also important to note that payroll software that is integrated with the AE pension providers will offer further time-saving advantages. Users can instantly produce customisable reports giving full visibility of AE at any stage.

Furthermore, progressive software companies, such as BrightPay are currently working with NEST on an API where users will have full integration with the pension scheme, NEST.

Payroll software can also greatly assist companies who have employees in different work categories or on different pay frequencies. The automation of the AE duties will lead to a seamless and straightforward process for the employers.

Options for HMRC users

The options are as follows;

  1. use free or low cost commercial payroll software with automatic enrolment functionality
  2. use a third party (non-payroll) provider (including a pension provider that offers assessments and/or communications)
  3. use The Pensions Regulator tool

TPR has a list of payroll software packages that are available, most of which offer some form of AE functionality. Be aware that some payroll software systems may only be offering very limited AE functionality, whilst others are charging high fees or an extra fee per employee, per month. Good quality payroll software should provide AE functionality as standard, include support and be free or competitively priced.

A number of leading payroll software companies, such as BrightPay have released a feature which allows the user to export employee details from the HMRC basic PAYE tools and import the data directly into the payroll software.

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Avoid errors, a significant time investment and non-compliance.  BrightPay automates the auto enrolment tasks for employers including staging & employee assessment, AE communications, opt ins, opt outs & refunds, postponement, ongoing monitoring, AE reporting and is integrated with 14 various pension providers.

You can simply import your employee details from HMRC Basic Tools into BrightPay. And yes, it even produces payslips!!

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Easy Import from HMRC's Basic PAYE tools to BrightPay