Best payroll software for small businesses in the UK (2026)
Six UK payroll options compared on what five employees cost a month, from HMRC's free software to cloud payroll priced per payslip.
Quick answer
For an employer paying five people, HMRC's own Basic PAYE Tools costs nothing for businesses with fewer than 10 employees. Moneysoft Payroll Manager works out at £7.92 a month on a £95 yearly licence. FreeAgent includes payroll from £19 a month, and Xero Ignite costs £25.50 with five people paid. Employment Hero and Staffology cost £40 and £43.
Key points
- HMRC Basic PAYE Tools is free for employers with fewer than 10 employees, but it does not mention payslips or pensions.
- Moneysoft's 20-employee licence is £95 a year before VAT, or £7.92 a month.
- FreeAgent and Xero include payroll in accounting plans, so the cost depends on what else you need.
- Xero Ignite charges £1.50 per person paid; Comprehensive includes five people for £55.
- Employment Hero's £4 per employee carries a £40 monthly minimum, from 1 November 2026.
- QuickBooks UK payroll, BrightPay and Sage could not be read and are not yet included.
What you would pay
Set your own numbers. The list below is ranked with this same calculator at our reference profile: five employees paid every month.
- HMRC Basic PAYE Tools Basic PAYE Tools£0.00
- Moneysoft Payroll Manager Payroll Manager 20£7.92
- FreeAgent Sole trader£19.00Limited company plan £33
- Xero Ignite£25.50
- Employment Hero Core Payroll£40.00
- Staffology Payroll (IRIS) Up to 20 payslips£43.00
Regular published prices only. Introductory offers and tax are left out. Figures are arithmetic on the provider’s own numbers, not a recommendation.
The list, in order
Order follows the published method on How we rank. Providers cannot pay for a position.
HMRC Basic PAYE Tools
HMRC's own free payroll software for employers with fewer than 10 employees. It works out tax and National Insurance and sends the figures to HMRC.
Suits: very small employers comfortable doing payroll themselves. Watch for: the page mentions no payslips or pension auto-enrolment, and it is not for agents or bookkeepers.
- Price
- Free
- Employees
- Fewer than 10
- Sends to HMRC
- Yes
- Pensions
- Not mentioned
Moneysoft Payroll Manager
Desktop payroll software sold as a 12-month licence by employee band, including auto-enrolment, updates and email support.
Suits: employers who prefer installed software and a yearly fee. Watch for: leavers during the tax year count toward the employee limit.
- Up to 20 staff
- £95/yr
- Up to 100
- £190/yr
- Up to 250
- £285/yr
- Auto-enrolment
- Included
FreeAgent
Accounting software with monthly payroll and PAYE filing included in the price, which depends on business type rather than headcount.
Suits: small firms that want books and payroll in one subscription. Watch for: payroll is unavailable on cash-basis accounts, and limited companies pay £33 rather than £19.
- Sole trader
- £19/mo
- Limited co.
- £33/mo
- Per employee
- No charge
- Free with
- NatWest group or Mettle
Xero
Payroll included in Xero's accounting plans. Ignite charges £1.50 per person paid; Grow, Comprehensive and Ultimate include 1, 5 and 10 people.
Suits: businesses that want payroll inside their accounting software. Watch for: Grow covers only one person, and Ignite caps invoices at 20 a month.
- Ignite
- £18 + £1.50/person
- Comprehensive
- £55, 5 people
- Ultimate
- £70, 10 + £1 each
- Per user
- No charge
Employment Hero
Core Payroll at £4 per employee a month with a £40 monthly minimum, from a platform that also sells HR and rota tools.
Suits: growing teams that may add HR software later. Watch for: these prices apply to new customers from 1 November 2026, and VAT treatment is not stated.
- Core Payroll
- £4/employee
- Minimum
- £40/mo
- Managed
- £14/employee, min £140
- From
- 1 Nov 2026
Staffology Payroll (IRIS)
Cloud payroll priced by payslips a month, with a flat £43 for up to 20 and an employee portal for payslips and P60s.
Suits: employers who want employees to download their own payslips. Watch for: the page says prices are "subject to VAT" without saying whether £43 includes it, and its band edges differ between sections.
- Up to 20 payslips
- £43/mo flat
- 21–50 payslips
- £2.15/payslip
- Employee portal
- Included
Figures read from each provider’s own page on 29 October 2026. Prices exclude VAT except where a provider does not say. Reference profile: five employees paid every month. Unranked entries publish no price that fits it.
- QuickBooks UK payroll — prices load in the browser only and could not be read on 29 Oct 2026.
- BrightPay Cloud and Sage Payroll — their pricing pages refused automated reads on 29 Oct 2026. To be confirmed by hand.
UK payroll costs range from nothing at all to more than £40 a month for a small employer. The spread comes from what is bundled: HMRC's own tool only calculates and reports, while cloud services add payslips, pension handling and employee portals.
How the ranking works
We ranked each option by monthly cost for an employer paying five people, using regular prices read from each provider's own page on 29 October 2026. Annual licences are divided by 12. Introductory offers are left out. See how we rank.
| Option | How it is priced | Five employees a month |
|---|---|---|
| HMRC Basic PAYE Tools | Free, fewer than 10 employees | £0 |
| Moneysoft Payroll Manager | £95 a year, up to 20 | £7.92 |
| FreeAgent | £19 sole trader plan, payroll included | £19 |
| Xero Ignite | £18 + £1.50 per person | £25.50 |
| Employment Hero | £4 per employee, £40 minimum | £40 |
| Staffology Payroll | £43 flat, up to 20 payslips | £43 |
HMRC's own software
Basic PAYE Tools is free for employers with fewer than 10 employees. It works out tax and National Insurance and reports to HMRC. It needs a PAYE Online login, and the page does not describe payslips or pensions.
Payroll inside accounting software
Xero's UK plans include payroll: Ignite charges £1.50 per person, Grow covers one person, Comprehensive five and Ultimate ten, then £1 each. FreeAgent includes monthly payroll and PAYE filing in its plans at no extra cost per employee. Our UK accounting comparison covers both as bookkeeping tools.
Standalone payroll
- Moneysoft sells desktop software on a 12-month licence: £95 for up to 20 employees, £190 for 100 and £285 for 250, all before VAT. Its prices page says leavers count toward the limit.
- Employment Hero charges £4 per employee a month with a £40 minimum for Core Payroll, for new customers from 1 November 2026.
- Staffology charges £43 a month for up to 20 payslips and £2.15 per payslip from 21 to 50, with an employee portal for payslips and P60s.
The bigger cost: employer National Insurance
For 2026–27, employers pay 15% National Insurance on earnings above £5,000 a year per employee, and the Employment Allowance is £10,500. Our guide to what an employee really costs works through the numbers, and the payroll cost calculator compares software prices for any headcount.
Not yet included
QuickBooks UK payroll shows prices only after its page runs scripts. BrightPay Cloud and Sage Payroll refused automated reads. All three are left out until confirmed by hand. The US comparison covers dollar pricing.
Keep reading
Best payroll software for small businesses in the US (2026)
Four full-service payroll services compared on what five employees cost a month, with the base fee and per-person fee separated out.
Guide · US & UKWhat an employee really costs: US payroll taxes vs UK employer National Insurance
The salary is only the visible part. Here are the employer taxes, minimum pay rules and statutory costs on top of it in the US and UK, with worked examples.
Calculator · UK editionPayroll software cost calculator
The same calculator on its own page, in pounds.
Questions
Is there free payroll software in the UK?
Yes. HMRC’s Basic PAYE Tools is free for businesses with fewer than 10 employees. It works out tax and National Insurance and sends the figures to HMRC. Its gov.uk page does not mention payslips or pension auto-enrolment, so many employers pair it with other tools. It is not designed for agents or bookkeepers.
Do I need payroll software if I am a sole trader with no staff?
No. Payroll software is for running PAYE when you employ people, including yourself as a director of a limited company. A sole trader without employees pays tax through Self Assessment instead. Our UK tax software comparison covers the software for that.
Are these UK payroll prices including VAT?
Moneysoft, FreeAgent and Xero quote prices excluding VAT. Staffology’s page says prices are subject to VAT without saying whether £43 includes it, and Employment Hero’s page does not state VAT treatment. VAT-registered businesses can usually reclaim VAT on software they use for the business.
Which payroll options include pension auto-enrolment?
Moneysoft states that auto-enrolment of workplace pensions is included. The other pages we read either do not mention it or describe it on separate pages we have not yet checked. Employers must enrol eligible staff, so confirm how any product handles pensions before you rely on it.
Why does FreeAgent cost the same for one employee as for five?
FreeAgent prices by business type rather than headcount. Payroll is included in the sole trader, partnership and limited company plans at £19, £27 and £33 a month before VAT, whatever the number of employees. It is also free while you hold a NatWest, RBS, Ulster Bank or Mettle business account.