Simplifying payroll complexities in 2025
January 2025 is a crucial time to do final checks on your payroll in various areas to ensure your payroll is compliant. as the end of the tax year in February is fast approaching. Many employers would have paid a bonus to staff members during December 2024 or perhaps earlier in 2024. We would advise a check on bonus provision and tax on bonus across your payroll to identify and resolve any non-standard scenarios.
These scenarios may include:
- An employee who received a bonus in December with tax provision extending to February 2025, and who is leaving your employment in January 2025.
- Incorrect tax deducted from bonus, which needs to be recalculated and spread over the remainder of the current tax year.
Retirement reform should be checked on your high-income earners. Some of your employees may have reached the annual allowable limit of R350 000 during 2024, or may reach this in January or February 2025. It is therefore important to engage these employees and advise on the variance to their nett pay that can be expected due to them reaching the annual allowable limit before the end of the tax year.
Any other payroll corrections in respect of the 2024/2025 tax year should be processed within the January or February pay run in order to have all financial figures correctly reflected on the employee’s IRP5 or IT3A certificate.
With many employees taking leave over the December and January period, we recommend doing a full leave reconciliation in partnership with the line managers to verify that all leave that was taken has been recorded in your payroll system, and that employee’s leave balances are correct for all leave types as you head towards tax year end.
The beginning of 2025 would be a good time to start looking at integrating your payroll software with other HR systems or functions such as time and attendance and other third-party systems. Having these integrations tested and configured before the beginning of the new tax year in March 2025 will enable your payroll to be more streamlined and avoid duplicate capture and maintenance of shared information between your payroll system and your other third-party systems.
In preparation for 2025 and the new tax year in March, we would recommend looking into centralised data management. Having employee documents uploaded to an employee digital file ensures these documents are safe and secure by being stored in one central location, together with the employee’s leave and financial information. Such documents may include the employee contract, ID document, driver’s license and any other documents deemed mandatory for you as the employer.
Taking these steps in good time helps create a seamless and efficient payroll system that benefits both the organisation and its employees. As we prepare for the new tax year, a proactive approach to payroll management will pave the way for a more organised, compliant, and employee-friendly workplace.
