Best Free Payroll Software For UK Small Businesses

When you’re looking to start using HR and payroll software, choosing a free platform is a smart way to keep costs down. But with the wrong free payroll software, what you save upfront can be eaten away by wasted admin time and hidden fees.

IRIS Payroll Basics comes out as our top free payroll software. Its free plan comfortably handles the basics, plus it has scalable paid tiers to consider as your business needs evolve. But, as our top four shows, the free payroll software landscape offers several options, each promising to simplify your payroll process.

Compare free payroll software for SMEs

Based on extensive research into the best payroll software for small businesses, our top free tools are a great starting point for SMEs with limited payroll needs and budgets. 

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Provider IRIS Payroll Basics	Provider Shape Payroll	Provider Primo Payroll	Provider EnrolPay
Best for Fast-growth startups	Best for Microbusinesses or side hustlers	Best for Free customer support features	Best for Retail and hospitality businesses
User limit: Nine	User limit: Three	User limit: Ten	User limit: Nine
HMRC compliant	HMRC compliant	HMRC compliant	HMRC compliant

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1. IRIS Payroll Basics – best for fast-growth startups

We like that IRIS automatically stores employee payroll data under the ‘Payroll History’ tab, which you can easily view and download for reporting purposes. Source: IRIS Payroll.

What do you get with IRIS Payroll Basics?

Well-known online payroll provider IRIS is a solid fit for fast-growth startups looking for a scalable platform that can support their growth ambitions. You can start off with the free software, called Basics, but you then have the option to graduate to its more sophisticated paid tiers. 

Payroll Basics does what the name suggests: you get basic payroll features like automatic calculation for PAYE, NI and statutory payments. It also provides real-time adjustments to ensure the software is always fully HMRC and GDPR compliant: particularly handy for small teams without a payroll expert or payroll service provider to handle it for them.

The other benefit is that all pay information is automatically copied over to any IRIS software so that businesses can get advanced features like HR services (although not quite as advanced as HR software), without worrying about losing employee data.

Great for Scaling Startups

With its extensive selection of modules and products, it's a great fit for fast-growing startups seeking a scalable platform to support their expansion goals.

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What don’t you get with IRIS Payroll Basics?

Because it’s a free plan, Payroll Basics has a user limit of nine employees, so companies won’t be able to use IRIS for free forever. But when users inevitably need to upgrade to a more advanced tool they can avoid fiddly data migration with the IRIS Payroll Upgrade Tool.

Also keep in mind that when paying employees, IRIS Payroll Basics can only be configured to handle one type of payment (like salary) and one type of deduction (like taxes) for each PAYE (the system used to deduct Income Tax and National Insurance contributions). For more complex payroll scenarios, users will need to upgrade to a more feature-rich payroll software solution.

2. Shape Payroll – best for sole traders or side hustlers

The Shape sidebar is designed to take care of core payroll functions such as editing account information, viewing payslips, and recording HMRC submissions. Source: Shape Payroll.

What do you get with Shape Payroll?

We recommend Shape Payroll to those who run a side hustle and want HMRC-compliant software to pay yourself as a business owner. Its quick setup time makes it an ideal platform for time-stretched sole traders with little to no payroll expertise.

We particularly like Shape’s ‘starter wizard’, a tool to simplify the switch to Shape from another platform. It’s essentially a checklist that takes users through employee setup and onboarding in six clear steps, covering everything from name and address to P45.

Shape also gives users peace of mind as it double-encrypts all sensitive information, such as entrepreneur card and bank account details. It also works with independent security teams to ensure its servers are up when users need them for 24/7 access to payroll data and information.

Ideal For Freelancers and Small-Scale Business Owners

Recommended for busy sole traders or side hustlers who need a HMRC-compliant, quick and easy-to-use payroll software.

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What don’t you get with Shape Payroll?

The key issue to keep in mind if you’re planning on using the free plan on Shape Payroll: it’s only free for up to three users. This will be ok for solopreneurs and microbusinesses, but if you have 10 employees and you’re still intent on using free payroll software, you should take a look at Primo Payroll instead.

Also bear in mind that the free plan does not have any customer support channels (eg. email, phone, or live chat). However Shape is an easy-to-use system so this is not a dealbreaker, and you can send Shape a message through its online form, or through social media. 

3. Primo Payroll – best for free customer support

Primo Payroll automatically updates its system to ensure employers understand and remain fully compliant with new tax codes. Source: Primo Payroll.

What do you get with Primo Payroll?

Primo Payroll’s free plan is available for 10 employees so it’s better for slightly larger teams. It’s also the only provider on this list to offer free customer support for employers needing bespoke help with payroll. New business owners, or those without a lot of payroll software knowledge, can contact the Primo Payroll customer service team by email for (low-priority) expert help – a perk that neither IRIS, EnrolPay, nor Shape Payroll offer.

Another Primo strength is its simple automatic enrolment solution for pension management. Automatic enrolment for pensions is a huge admin burden. You’ll also receive basic features like RTI submission, and being able to send payslips via email.

With Primo Payroll, all auto-enrolment compliance tasks including the postponement period are performed automatically in the background. Any information saved in Primo will be instantly uploaded to a company’s pension system. And yes, it’s all available on the free plan – although pension providers may charge a small fee for the integration.

Known For Strong Customer Care

Aimed at employers needing tailored payroll help with free customer support.

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What don’t you get with Primo Payroll?

Primo does not offer bulk payments on its free plan or Essentials 25 (the lowest priced paid tier), so users will have to manually send payments via bank transfer. The free plan doesn’t include a self-service portal, this is only available on the higher, paid tiers (so employees can’t easily view things like annual leave requests and accruement). 

4. EnrolPay – best for retail and hospitality businesses

EnrolPay’s self-service portal lets both employees and employers with minimal payroll experience easily track and view pay data. Source: EnrolPay.

What do you get with EnrolPay?

We recommend EnrolPay’s free plan, Self Service, to retail and hospitality firms. While lacking in key areas including RTI compliance we still think it’s a great way to get a foot in the payroll door with a basic platform, with no in-house IT expertise required – great for brick-and-mortar businesses like shops or cafes.

Employees (Self Service caters for up to nine) report good experiences with the self-service portal. Accessible from smartphone, tablet, laptop or PC, it is perfect for larger teams or managing workforces with high turnover (both of which are common in the service sector).

EnrolPay boasts a rollback function (for amending payroll before Full Payment Submissions are submitted) and write-back function (for correcting information that has already been submitted to HMRC). Both features are helpful for sectors employing part-time and temporary staff with fluctuating hours, like retail and hospitality.

Ideal For Brick-And-Mortar Businesses

Recommended for retail and hospitality businesses. It’s basic and not RTI-compliant but requires no IT setup—ideal for shops and cafés.

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What don’t you get with EnrolPay?

There’s one critical drawback users will need to know about EnrolPay’s free Self Service tier: it doesn’t perform payroll processing automatically, and therefore may not meet RTI reporting requirements. Instead, employee earnings and tax data will need to be manually submitted to HMRC by finance experts.

This is a dull and fiddly process that invites errors and potentially costly penalties, so we’d suggest thinking about the compliance risks before choosing this option. You should look at IRIS Payroll Basics if you want a no-cost payroll platform that submits RTI automatically.

Is free payroll software right for me?

If you have just a few employees and a simple payroll structure, a free plan might be sufficient for your needs. However, free payroll does come with limitations that can cause trouble for scaling or large businesses with over ten employees. 

Free software plans often restrict the number of employees you can manage. They may also lack features crucial for payroll management (EnrolPay has limitations in this area) and offer less robust security measures or customer support options (bar Primo). This can create additional roadblocks for your business, particularly where manual workarounds are needed.

SMEs should consider free payroll as a temporary measure while you research a paid or managed payroll solution that can accommodate your business growth. These offer scalability, advanced features, and reliable support, saving you time and money in the future.

Fortunately, payroll software doesn’t have to be expensive. For more insight on payroll software costs, we’ve rounded up the best deals currently available on the market on our cost comparison page.  

When should I avoid using free software?

While it can be tempting to go for a no-cost option and keep your spending as lean as possible, there are several scenarios in which the money saved won’t outweigh the critical risks.

You should avoid free options if:

• You have a team larger than 10 employees (the software won’t be able to support you).
• You have a complicated pay structure that includes employee bonuses and commissions. And for those working in hospitality, you’ll need to think about tips.
• You work in construction, as free software isn’t able to support CIS submissions.
• Your business is rapidly expanding. If you’re planning on hiring more employees in the coming months there’s little point in signing up for free software that’s only going to support you for a limited time.

Some other issues with free software you need to keep in mind:

Some free providers don’t support automatic RTI submissions. This could potentially result in financial penalties from HMRC for late, or inaccurate, submissions.

Many free options have limited help and support, so if you don’t have payroll expertise you could be in a stressful position in the event of an emergency.

Ultimately, it’s worth keeping in mind that if you end up being charged over a compliance error this could actually be more expensive than paying for more reliable software.

What to look for in a free payroll provider

The Startups team has been helping small business owners to understand and implement payroll for over 20 years. In that time, our researchers have identified six pain points commonly experienced by business owners when paying staff. 

We’ve listed them below, as well as what features to look for when researching payroll software to address each issue:

• Scalability: switching payroll software can be a headache. Avoid future trouble by selecting a platform that offers seamless upgrades to paid plans as your business grows. Look for options that won’t break the bank or require extensive data migration in case you move between different software platforms, rather than up a tier.
• Onboarding help: payroll software can be daunting to set up. Opt for a vendor that provides robust implementation support, including live training sessions and readily available customer service via multiple channels (email, phone, web chat, knowledge base).
• Strong security: protecting employee data is paramount. Your payroll software will be handling highly sensitive information. Ensure you choose providers with industry certifications like RTI compliance in the UK (where data protection laws are stricter). Additionally, verify that data is stored in the UK and confirm encryption standards.
• Customisation: payroll can fluctuate due to employee absences, commissions, and new hires. Prioritise software that permits last minute edits to payslips, account information, and reports.
• Transparent costs: beware of “free” plans that hide additional fees like monthly security charges. These can quickly make a seemingly free option more expensive than a budget-friendly paid plan. Scrutinise pricing to avoid surprises down the road.
• Employee help: constant questions about salaries can strain payroll departments. Invest in software with a user-friendly self-service portal accessible via mobile app. This allows employees to view and manage their payslips independently, fostering transparency and reducing administrative burdens.
• HR features: outsourcing HR can be costly. Finding a payroll software that takes care of basic HR functions (such as tracking employee benefits) is a great way to save money and reduce your list of business subscriptions.