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Payroll service prices

Payroll services are often an expenditure that small businesses have not considered, but learning what they are and how much they cost will certainly be useful to any business owner hiring and employing staff


When you run a business that includes the hiring of staff, this naturally includes a number of disparate salaries. One cost that some small business owners neglect to factor into their bottom line, however, are the expenses that can be incurred by running a payroll.

Running a payroll in a timely and accurate manner is a legal requirement of any employer, and it’s typically advisable to use the services of a specialist employee and payroll software.

Naturally, this all adds up to further expenses for you as a business owner, and you may find yourself questioning just what you can expect to receive in return for your investment.

This is where we can help. Read on to learn everything you need to know about navigating payroll services and prices. Or, for assistance that’s more personalised to your business, answer the questions in the form at the top of the page to receive custom quotes directly from service providers; an easy way to get the best deal for your business

What are payroll services?

There are a variety of payroll packages available to employers, with prices that vary according to the level of service provided. It's important to understand exactly what you are looking for and review the qualities of each package individually, as opposed to settling for what appears to be the most agreeable price point.

A very basic payroll package will typically:

  • handle calculation of any tax deductions from a staff member's gross salary
  • take care of RTI returns with the Inland Revenue
  • print hard copies of pay slips that can be distributed to staff

More advanced payroll service packages will offer:

  • the printing of essential P45 and P60 slips
  • calculations of Statutory Sick Pay and bespoke Student Loan deductions
  • running reports and much more

This guide will talk you through the plethora of options available to you as an employer that runs a payroll, and will help you make the right decision as to which payroll package will meet your requirements.

How much do payroll services cost?

Payroll services costs vary from £5 to £12 per employee per month. Payroll costs depend on how many staff you employ as well as the type of payroll service you want. How hands-on you wish to be with the handling of a monthly payroll as a business owner is an important consideration when choosing a payroll service provider.

The cost of a payroll service is typically a weekly or monthly charge, calculated per employee. If you pay a regular and consistent salary to a number of different people (typically anything from double figures onward) you should be able to qualify as a medium-sized business and negotiate a rate with any payroll provider.

If your wage structure operates outside of a conventional fixed-rate monthly schedule (a salary model based upon commissions and overtime that may see the bottom line fluctuate from payslip to payslip, for example) you may be asked to pay some kind of premium.

The table below includes a basic summary of what you might expect to pay in money terms for payroll services.

ServiceFeatureCost
Basic payrollIncludes the most basic elements required.£5/employee each month
Mid-level payrollIncludes the basic elements, with other options included too.£8/employee each month
Advanced payrollAdvanced payroll will include everything your business could possibly need.£12/employee each month

Hiring an external payroll service provider would ensure your business is wholly legally compliant, and shift any burden of proof or responsibility regarding payments and tax onto your supplier.

This will spare you any lengthy and potentially difficult conversations with HMRC (or worse, a hefty fine for incorrect reporting caused by human error), as well as ensuring that you will not need to become an expert on the ever-shifting tax landscape.

There are a number of services provided by a payroll service that we will shortly discuss in more detail, and while many of them can theoretically be completed yourself as a business owner, you will spare yourself a great deal of trouble by calling on the services of a professional!

Payroll prices based on service

As a business owner you will be aware that everything has its price, and payroll services are no exception. The costs you will incur depend on how much support you expect the service to provide you with.

If you are confident and comfortable with the functions of a payroll and would perform the task yourself if only there were more hours in a day, you could look to a lower-cost part-managed payroll service. This merely asks your provider to handle some of the time-consuming paperwork and print the hard copy payslips for distribution to employees.

If you have more complex needs, or you are new to the realm of hiring a number of external employees due to an expansion in your business, it is advisable to seek the assistance of a full-service payroll provider.

It is not always essential to sign up to an ongoing service, however. If you are taking on a number of new staff on short-term contracts for a particular project, a Pay as You Go payroll service could cover everything you need.

The table below includes a side-by-side comparison of the main options for your business.

Type of serviceFeatureBenefit
Fully managedAn external company handles everything.Allows for complete freedom from payroll tasks
Part-managedYou and an external company share management.Allows for some freedom, but also offers access when required
Pay-as-you-goYou only pay for specific tasks on an ad-hoc basis.Allows for the greatest level of flexibility of the three options

Let's take a look at what each of these types of payroll service can offer you. Or if you feel ready to receive information directly from trusted providers, feel free to use the contact form at the top of the page.

Fully-managed payroll prices


As the name may suggest, outsourcing your entire payroll facility to a fully-managed service is the costliest option open to you – prices may typically be around £10 per person, depending on many employees you retain (discounts are often available to businesses that hire a greater number of people).

However, in doing so you will be purchasing complete peace of mind and the ability to focus your energies and attentions of other matters pertaining to your business, as a full-managed payroll service also adopts a number of HR practices.

Value for money in a fully-managed service will be typically be provided by:

  • Regular helpdesk support from a dedicated account manager, ensuring that any questions you or your staff may have regarding salary are answered quickly and efficiently.
  • Professional advice and awareness of the ever-changing tax landscape in the UK, ensuring that there are no nasty shocks when your year-end payroll is filed with HMRC – which will also be handled by the payroll provider, saving you both time and resource.
  • Complete transparency on all matters pertaining to payroll, so you can see exactly where every penny of your businesses investment is being spent.
  • A full and comprehensive breakdown of any deductions from an employee's gross salary, and any calculations amendments that may be necessary, detailed on their printed payslip.
  • Additional hard copy documentation that an employee may need to present to a government body, including an annual P60.
  • The processing of payments directly to employees via BACS.

As previously pertained, every provider will have a different rate for these services and will provide a breakdown of the cost involved with each upon request. As you will see, however, you can potentially save yourself plenty of time and effort by outsourcing to a full-service facility – as well as negating the requirement of placing a dedicated clerk on your own payroll.

Part-managed payroll prices


The cost of a part-managed payroll service can vary wildly from provider to provider, depending entirely on exactly how much support and assistance you will need.

Ultimately, this is akin to a pick-and-mix approach to a fully-managed service; if you already have a number of policies and practices in place, or an existing financial clerk or HR manager that can handle the bulk of your payroll needs but needs some assistance on occasion, you can call upon as many or as few services of an external provider as you see fit.

A business owner is best served by a part-managed service if they are looking for access to dedicated payroll software without the expense of purchasing it up-front.

Perhaps you will look to call upon the services of an external provider to manage your day-to-day needs and handle all legal issues surrounding HMRC, but you prefer to retain a degree of control by inputting the data yourself to accommodate often-changing wage patterns due to shifting wage structures and bonuses?

Or maybe you'd like to handle all elements of the payroll process in-house, with the exception of filing your year-end reports, processing the BACS transfers and printing off the essential documentation that your staff will require?

If you adopt a part-managed service model, you will be afforded with various degrees of flexibility. In terms of how much you will be expected to pay, in addition to how much support you need.

The most basic and no-frills payroll service could incur a monthly cost of as little as £5 per employee, or maybe even less – always ask for a full breakdown of exactly what the external contractor will be supplying you with for their fee, and do not be afraid to negotiate if you feel that you are being charged for services that you do not require.

What you choose will depend on the ability and confidence of your existing staff to handle these queries.

Pay-as-you-go payroll prices


A pay-as-you-go payroll service model is the perfect solution for any business that encounters huge peaks and troughs in the size of their labour force, affording all the benefits of a fully managed service without the need to tie yourself into a long-term contract.

Obviously this means that you will have to pay towards the upper end of the fully managed service scale with no discounts for more substantial numbers, as your provider will be seeking some kind of recompense for the absence of security that comes from guaranteed income. However, the flexibility provided by a pay-as-you-go model can be essential as staff and come and go.

If you own a construction business, for example, and need to expand your workforce by a third for a set number of months while a particular project is completed, this is a way of ensuring that you and your staff are legally covered in terms of payment throughout the duration of the work.

An alternative use of the pay-as-you-go model of payroll management is to cover a permanent in-house staff member who is unable to perform the task for a set period of time – a fixed recovery time from a bout of ill-health, for example, or maternity leave.

Your employees will still expect to be paid in a timely and accurate fashion during this period, and HMRC are not renowned for their patience and sympathy in dealing with financial inaccuracies caused by unforeseen personal circumstances.

Enlisting the help of an external payroll service may look like a substantial investment on paper, especially if you are not used to accruing expenses in this line of work, but they can save you a great deal of money – and heartache – in the longer term.

Always investigate the potential provider to ensure that they have a clean reputation and are HMRC-approved, and make sure that you are only paying for what you actually require, but you will find the expenses incurred to be worthy.

Compare payroll service prices

The information on this page should help your business to understand what kind of services and prices you might be looking at for payroll. For more information directly from suppliers, with options tailored to your requirements, simply complete the form at the top of this page today.

For more information on other payroll service options, you can visit our small business payroll services.

Or, if you're looking for a more detailed account and comparison of the payroll providers out there, take a look at our page on the top payroll service providers.

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