Which item is calculated by payroll software?

Payroll software is specifically designed to manage employee compensation, tax calculations, and related financial data. One of its primary functions is to calculate Pay As You Earn (PAYE) tax and National Insurance Contributions (NIC) liabilities based on the earnings of employees. This ensures that employers comply with legal tax obligations and accurately deduct the necessary amounts from employees' wages.

In contrast, employee performance metrics involve assessing how well an employee meets specific goals or standards, which falls outside the scope of payroll functions. Budget forecasting is a strategic activity that involves predicting future financial performance based on various assumptions and is usually handled through financial planning tools rather than payroll software. Marketing analytics pertains to data analysis related to marketing campaigns and customer engagement, which is completely unrelated to payroll processing and management. Thus, the correct choice highlights the core purpose of payroll software in automating tax-related calculations for businesses.