What is Single Touch Payroll and how does it compare to UK reporting?

Single Touch Payroll (STP) is the Australian standard for real-time tax and superannuation reporting, almost identical to the Real Time Information (RTI) system familiar to HR and finance teams across the United Kingdom.

What is the meaning of Single Touch Payroll?

Single Touch Payroll (STP) is an Australian government initiative to streamline business reporting obligations.

It requires employers to report payments such as salaries, wages, tax withheld and superannuation (covering pensions savings) to the Australian Taxation Office (ATO) at the same time they pay their employees.

How is STP similar to the UK system?

STP is reassuringly familiar to UK finance managers because it mirrors the Real Time Information (RTI) system used by HMRC.

Just as you send a Full Payment Submission (FPS) every pay run, STP-enabled software sends similar data to the ATO in one unified submission.

This ‘single touch’ ensures that the tax office has up-to-date information on a business’s tax and superannuation obligations, and each employee’s year-to-date income throughout the financial year.

How does STP work for international operators?

International operators expanding to Australia must use software that is specifically ready for STP Phase 2 reporting, as standard UK setups will not work.

When you process your payroll, the solution will automatically send the required data to the ATO. This eliminates the need to provide payment summaries to employees at the end of the financial year, as the information is available to them online via their myGov account.

How does STP compare to UK Real Time Information?

While the acronyms differ, the mechanism is largely the same. Both systems were introduced to modernise the tax system, and ensure that data regarding income tax and social security (National Insurance or superannuation) is captured in real time.

UK businesses accustomed to the rigour of RTI will find the transition to STP relatively smooth, provided they have the right digital infrastructure. However, specific rules around superannuation (‘super’) liability and payment deadlines differ significantly from UK pension regulations.

What is the current UK payroll landscape in 2026?

The key reforms introduced, in April 2025, for the 2025/26 tax year involve significant shifts in National Insurance rates and thresholds that impact your budget. While understanding STP is vital for global operations, domestic compliance remains the priority for UK-based HR and finance teams.

How have National Insurance and wages changed?

In April 2025, the cost of employing staff in the UK rose significantly due to an increase in the Employer National Insurance rate (NICs) to 15%.

Simultaneously, the Secondary Threshold, at which employers start paying NICs on an employee’s salary, was reduced from £9,100 to £5,000 per year, and is expected to be frozen at this level until April 2031.

These changes, alongside that concerning the National Living Wage, which is projected to rise to £12.71 per hour in April 2026, mean that accurate data and forecasting enabled by automated payroll software are more essential than ever.

What new statutory rights have been introduced?

The Employment Rights Act 2025 (formerly ‘Bill’) has now received Royal Assent, legally confirming the introduction of day-one rights for paternity, unpaid parental, and bereavement leave in the upcoming 2026/27 tax year.

Furthermore, the Neonatal Care (Leave and Pay) Act, introduced in April 2025, has strengthened leave entitlements by providing up to 12 weeks of additional paid leave for parents whose babies require neonatal care. HR and finance managers must ensure their systems are tracking these new leave types accurately to ensure full compliance.

What changes are expected in April 2026?

As we look ahead to the new tax year in April 2026, reforms focus heavily on expanding worker rights, adjusting the National Living Wage, and further digitising tax reporting. Finance and HR directors should be finalising their systems now to handle these upcoming shifts.

How will the National Living Wage rise?

Following the Low Pay Commission’s recommendations, the National Living Wage is projected to rise to £12.71 per hour in April 2026. This increase aims to keep wages aligned with the cost of living, but will add further pressure to payroll budgets already strained by the NI reforms.

How will employment rights expand?

The Employment Rights Act is set to implement major changes by April 2026, including making Statutory Sick Pay (SSP) available from the first day of illness, by removing ‘waiting days’.

Additionally, rights to paternity and unpaid parental leave are expected to become ‘day one’ rights, meaning your software must be ready to track eligibility from an employee’s very first day of employment.

What is the future of digital tax reporting?

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) becomes mandatory in April 2026 for landlords and self-employed individuals earning over £50,000.

While this primarily affects sole traders, it signals a broader move by HMRC towards total digitalisation, reinforcing the need for a flexible, integrated HR, payroll and finance platform.

Why is cloud software essential for compliance and efficiency?

Cloud software is essential because the ATO and HMRC both rely on digital data streams that manual spreadsheets cannot reliably provide.

Whether you are dealing with STP in Australia or RTI in the UK, modern platforms are required to handle the real-time data transmission.

How can software reduce administrative burden?

Using compliant solutions reduces administrative burden by allowing you to run your monthly process in minutes rather than days.

For example, good payroll software will automate the calculation of tax, National Insurance, and pension contributions, ensuring you send the correct information to HMRC without any manual intervention at all. This level of automation is crucial when dealing with complex reforms like the 2025 NI changes.

How does integration improve financial visibility?

Modern payroll solutions do not exist in a silo, but will connect directly with your accounting software. This integration works by automatically mapping payroll components, such as net pay, tax, and pension liabilities, to your general ledger codes, ensuring that every penny is accurately recorded without manual data entry errors.

How does technology enhance the employee experience?

Technology enhances the employee experience by providing the transparency that modern workforces expect. Under STP, Australian employees can check their super and tax info online.

Similarly, UK staff can benefit from electronic payslips and online portals, where they can view all of their documents and manage their leave. This self-service approach reduces the admin load on your office resources, and builds trust with your workforce.

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