Best online payroll software for UK small businesses

1. Sage Payroll: best for small businesses wanting a comprehensive suite of accounting tools

Pricing from: £10 per month + VAT, billed annually (first three months are FREE)

Sage Payroll’s weekly pay breakdown

Our expert researchers found that every aspect of Sage Payroll has been designed with the end user in mind. For customers, this meant that taking care of your employees’ pay, tax, and pension contributions – even when payroll year end approaches – didn’t need to be a stressful and time-consuming headache.

And, because Sage Business Cloud offers a range of HR tools, its payroll provision can integrate seamlessly with other business admin tools, ensuring you maintain consistency in your financial records. Sage Payroll and Clear Books for example differ in their offerings however, with Sage focusing more on payroll and Clear Books providing a broader accounting software suite.

What are the benefits of Sage Payroll?

You’ll be able to collaborate in real-time on payroll reports with your accountant, and automatically track your payroll data with Sage Accounting (available from £15 per month). Sage’s built-in corrections feature allows you to amend data without rerunning pay runs. Other providers, including Xero, require you to post an unscheduled pay run to correct the mistake quickly, and file it with STP.

Another handy, newly-implemented feature is Sage Payroll’s integration with Equifax. The partnership automates collating employment and income details to make applying for loans or mortgages easier – an added bonus that staff will thank you for.

What are the limitations of Sage Payroll?

We found that existing Sage Payroll users have complained extensively about Sage Payroll’s month end and year end reports. These are apparently hard to view and often need cleaning up and correcting – particularly annoying if you’re an accounting firm taking care of payroll for a client.

How much does Sage Payroll cost?

Prices start from £10 per month for teams of fewer than five, but there are three tiers available that grant access to more advanced features. You can add up to 100 employees in total to each plan.

• Payroll Essentials (£10 p/m for five employees + £2 per each additional employee)
• Payroll Standard (£20 p/m for five employees + £4 per each additional employee)
• Payroll Premium (£30 p/m for five employees + £6 per each additional employee)

2. Moorepay: best for SMEs needing extra customer support, and a thorough onboarding process

Pricing from: contact the support team for quotes

Moorepay’s People Dashboard

Moorepay is better known as a payroll service, but its cloud based payroll software has a slick design and easy-to-use interface, making things super simple for your in-house payroll team (if you have one) to work with compared to clunkier, legacy platforms. It also boasts a top-tier contact team, making it our number one choice for SMEs needing additional support.

What are the benefits of Moorepay?

With Moorepay, accessing and processing payroll on the go is super easy thanks to Moorepay’s mobile app, and is ideal for remote and hybrid working teams. The training and onboarding process is the most thorough of all the competitors we’ve reviewed, and guarantees to get you up and running with the software effortlessly.

When we tested the software, we found that Moorepay is also HMRC-compliant, BACS-approved, and auto-enrolment ready. Plus, its standout feature is its people analytics. You’ll get access to real-time, insightful dashboards and data-driven graphs – which is where Sage Payroll falls down.

What’s more, if you’re struggling to wrap your head around the countless payroll features at your disposal, the specialist UK-based support team will be on hand to manage any technical requests or issues.

What are the limitations of Moorepay?

Moorepay’s payroll software is more suited to medium-sized businesses, not micro-sized. Its cost outweighs the benefits for businesses with 2 to 30 employees (despite Moorepay not publicly sharing its pricing plans).

However, once you scale into the SME category, Moorepay’s payroll software is a serious contender for the top spot. Its usability, bespoke setup and onboarding process, all generate excellent support and customer satisfaction rating (it gets a Trustpilot score of 4.5/5 stars).

Moorepay and ADP are prominent HR and payroll providers, but if you’re looking for a provider that is more globally-oriented, ADP might be a better bet for you.

How much does Moorepay cost?

Moorepay does not publish upfront costs on its website which means businesses need to contact the team to get a bespoke quote. In the current envrionment, with a recession impending, this could be a benefit, however.

Haggling for the lowest possible cost will help to score a big saving for your business and strengthen your cash flow.

3. ADP iHCM: best for teams with complex payroll requirements, like hospitality

Pricing from: contact the support team for quotes

ADP’s pay and tax dashboard

ADP’s cloud based payroll offering iHCM combines two of small businesses biggest responsibilities: payroll and HR. Organisations with a lot of changing rotas, for example hospitality businesses, will find ADP a great tool for tracking employee hours and monitoring more specialist payroll tasks for example, bonuses.

What are the benefits of ADP?

ADP’s cloud based payroll software iHCM is an all-in-one solution that is simple to implement, has an easy-to-use interface, and lets you process payroll accurately through process automation.

Our experts found that users particularly like ADP for the simplicity of running payroll reports, which can be done in just two steps. Automations, as with Xero, are a strong point for ADP. Emails are automatically sent to all involved parties when any payroll process is completed, keeping everyone up-to-date and staff happy.

What’s more, it is our recommended provider for businesses that need to integrate online payroll software with other solutions, like small business HR software and time and attendance services.

What are the limitations of ADP?

Customer feedback suggests that ADP is a bad software option for help and support. Its contact team can reportedly take a while to get back to users – frustrating if you encounter a payroll error that needs fixing promptly, such as during month end.

Business users can contact ADP through the helpline, but there doesn’t seem to be any other sales assistance channel available online.

How much does ADP cost?

Like Moorepay, ADP does not reveal its pricing which means interested parties need to contact the support team to ask for bespoke quotes.

4. Clear Books: best for micro businesses that want flexible payment plans

Pricing from: £12.15 + VAT per month (billed annually)

Clear Books’ monthly dashboard

As the most flexible online payroll software solution on our list, Clear Books allows customers to adjust the number of employees on its subscription at any time with any number of employees, unlike Sage Payroll.

What’s more, if a business owner decides to change payroll providers or move to managed services, they can cancel their subscription at any time. We think it’s the best option for microbusinesses or side hustles that have inconsistent cash flow month-to-month.

What are the benefits of Clear Books?

Aside from Clear Books’ flexibility, the payroll software offers click-to-pay feature, allowing employers to save time and pay all their staff at once, rather than entering details manually.

Payslips, P45s and P60s with company logos and colours can be generated with ease in seconds, which makes onboarding new recruits much easier if you have a higher staff turnover.

Integration with Clear Books accounting software also lets you manage and track expenses and tax with ease, which means it rivals Moorepay in terms of financial reporting.

What are the limitations of Clear Books?

Our thorough evaluation of Clear Books, our expert researchers found that more complex payroll tasks are unsuitable for this platform. For example, if you make a mistake with Clear Books you’ll need to undo all periods back to (and including) the incorrect period for these employees.

This increases the risk of users making a mistake and potentially incurring a fine from HMRC – much riskier in today’s poor economic climate. Sage Payroll makes the process much simpler, by comparison.

How much does Clear Books cost?

Clear Books is the ideal online payroll software for businesses that need an added layer of flexibility. It is also an affordable solution with transparent pricing, which means it scores better for pricing than Moorepay.

With prices starting from £13.50 per month (billed annually) for an unlimited number of users it’s also the best value for money. Plus, if you purchase a two-year subscription, that drops even lower to £10.80 per month.

5. Xero: best for small businesses wanting to save time by automating payroll processes

Pricing from: £33 + VAT per month for sole traders

Xero’s payroll overview

In terms of bookkeeping, Xero has a number of excellent features to make payroll processing as simple as possible. The software automates tax, pay, pension, and even leave calculations, letting you focus on other admin tasks.

What are the benefits of Xero?

Xero’s automation features are unrivalled in the payroll software space, and its Xero Me mobile app is an excellent, easily accessible feature that will help you to save time on expense management and other tasks relating to staff pay.

Automations make the whole process of payroll much easier as fiddly, time-consuming tasks can be managed without business owners needing to constantly check on them, giving them more time to run the company. Sage Payroll also offers some automated tasks, like pension auto-enrolment, but Xero’s list of automations is definitely longer.

The employee self-service feature is also incredibly handy for viewing payslips and requesting leave online, saving you the hassle of integrating a holiday request system with other software. And, of course, the software is HMRC compliant.

What are the limitations of Xero?

Our expert researchers found that one potential drawback in using Xero for your payroll software is that it’s only available as part of the Xero accounting package – which could be a problem if you already have existing accounting software. In this case, adding Xero solely for payroll might be unnecessary and costly.

The good news is that Xero is one of the top accounting software brands on the market. In fact, we named it our number three choice in our guide to the top small business accounting software. So, if you don’t already have existing accounting software: Xero Comprehensive is a great option for businesses starting from scratch.

How much does Xero cost?

Xero is a premium payroll option compared to other brands, but don’t forget this is because you’ll be getting all of that accounting wizardry as part of the package.

• Xero Grow (£33 per month) offers payroll for one employee
• Xero Comprehensive (£47 per month) offers payroll for five employees
• Xero Ultimate (£59 per month) offers payroll 15 employees