Best payroll software for small businesses in the UK

What should I look for in payroll software for small businesses?

When looking for payroll software, whether it’s paid-for or free, you need to make sure that it’s capable of reporting to HMRC in real-time. This is known as being RTI compliant. HMRC regularly checks payroll software to evaluate whether or not it’s RTI compliant, and it keeps a list of approved software programs.

6 of the best small business payroll software in the UK

Every business is different, and you should make sure you properly evaluate your options before making a decision on payroll software. Here are some of the most notable payroll software choices for small businesses in the UK, at different price points.

• Xero Payroll
• Quickbooks
• Kashflow Payroll
• Sage Payroll
• BrightPay
• FreeAgent

Xero Payroll

Xero is an extremely popular cloud-based accounting solution offering a payroll plug-in if you choose them as your accounting software provider. It offers automated payroll and self-service for employees, and is HMRC-compliant. 

Xero plans are available from £16 a month. 

Quickbooks 

Quickbooks products are aimed mainly towards small and medium sized businesses. Their wider accounting software package lets you manage payslips, pensions, and statutory pay, and make real-time submissions to HMRC. Payroll is connected to your other accounting functions too, for good visibility of your overall finances. 

Packages start at £5 a month for sole traders and £8 a month for small businesses. 

KashFlow Payroll

KashFlow allows you to carry out your payroll tasks in the cloud. You can automate payroll approval and update payroll in real-time, and offer employees self-service access to their data. It also integrates with Kashflow Bookkeeping. 

Kashflow’s core offering starts at £8.75 a month. 

Sage Payroll

Sage is one of the biggest players in the accounting and bookkeeping world. It’s RTI-compliant and allows you to complete payslips and manage pension deductions and more. 

Sage’s simplest payroll offering lets you pay employees and do essential HR admin, and costs £10 a month. You’ll have to pay £20 a month to manage payroll, people, and their timesheets, or £30 a month for advanced HR like shift scheduling. 

BrightPay

BrightPay is a prominent payroll software provider. They have a simple but attractive interface that will seem familiar if you’re used to software like Excel, and are now fully cloud-based. 

The product lets multiple users work on payroll at the same time, automates and streamlines auto-enrolment tasks, and more. Prices are on a sliding scale – £10.35 a month, for example, for the cloud version run by one employer for a business with five employees. 

FreeAgent

FreeAgent is a fully-fledged bookkeeping and accounting solution that also comes with a payroll add-on. It’s cloud-based, and also includes a mobile app which can be useful if you’re on the go.
Remember, though, that if you want to use FreeAgent’s payroll solution, you’ll need to move your accounting onto their platform too. Prices start at £33 a month (half price at £16.50 for the first six months) or free if you have a NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle business bank account.

Is there free payroll software in the UK?

If you’re looking for free payroll software for your UK small business, there are a few options. As well as offering the Basic PAYE Tools suite, HMRC has a list of approved free payroll software on their website, which is worth checking out. 

Some of these are feature-limited in their free versions. Others are free only for a limited time. As with paid payroll software, it’s important that you consider the specific requirements of your business before making a decision.

HMRC Basic PAYE Tools

The Basic PAYE Tools suite is developed by HMRC itself. It’s a good option if you’re on an extremely tight budget and only require the basics. Plus if your payroll software is missing some functions, you can use this tool alongside it to fill any gaps.

FreeAgent

Like the name might suggest, you can access FreeAgent’s payroll software for free with certain business banking accounts. It supposedly offers fuss-free Self Assessment and VAT filing, directly to HMRC. 

BrightPay Free

BrightPay offers a free licence for very small businesses with up to three employees. Keep in mind that this free version doesn’t include support for CIS (Construction Industry Scheme) or employee’s expenses and benefits (including P11D). 

EnrolPay

EnrolPay offers a free version of their SmallPay software for businesses with fewer than 10 employees. This might be particularly useful if you have temporary employees, as it lets you manage flexible workers and client bookings, but offers many of the basic payroll functions too. 

Do you use payroll software at your small business? Do you have any recommendations? Let us know in the comments.