Best payroll software for small businesses

Find the perfect payroll service for your small business with this in-depth review of the best payroll software providers on the market.

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Extensive research into the payroll software market, carried out by Startups experts, reveals the best payroll software for small businesses is 12Pay by IRIS. This user-centric software demonstrates smart, tailored features that make it an easy-to-use service that doesn’t compromise on functionality.

We judged the top providers against five key payroll categories identified by our small business users during our more than twenty years working with them: pricing, security, employee management, accounting features, and usability. Here are the five we like most for UK SMEs:

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Sage Payroll



Best for

Small businesses wanting to seamlessly integrate payroll with its accounting software

Best for

Small businesses needing digital resources to answer employee queries

Best for

Small businesses wanting a comprehensive suite of accounting tools

Best for

Small businesses wanting to save time by automating payroll processes

Best for

SMEs needing extra customer support, and a thorough onboarding process


£1-7/mo plans
+ 0.40/mo for payroll features


Free for 9 employees
£73/y for 30 employees
£144/y for unlimited employees


£8/m for 1-5 employees
£13/m for 6-10 employees
£19 – £106/m for additional employees


£5/m for 5 people
£49/m for 10 people
+ £1/m for additional employees


Provides personalised quotes after assessing business needs

HMRC compliant
HMRC compliant
HMRC compliant
HMRC compliant
HMRC compliant

Effective payroll solutions simplify the paying process by automating payroll duties to ensure they are fully HMRC compliant. The best products also boast transparent, self-service apps where staff can access and manage their personal information – keeping your talent satisfied in the midst of today’s hiring crisis.

But the important question is, regardless of 12Pay’s title as the best payroll software, is it the right choice for your business? It isn’t the only game in town – Moorepay and Xero also have fantastic payroll software solutions.

Below, we’ll guide you through all of the options available on the market to make sure you find the best one for your unique needs. We’ll provide insights into the differences between them all to help you find the best match for your business needs.

Or, to save time, you can simply fill in our simple 🔍cost comparison tool to find quotes that have been tailored to your firm’s unique specifications. Don’t worry: this service is free, takes just one minute, and involves zero obligations on your part.

1. 12Pay by IRIS: Best for small businesses enrolling lots of sub-contractors, such as construction workers

12Pay by IRIS
Easy-to-use, well-established payroll system.
  • Free trial Free plan
  • Price from Free for 9 employees
  • Easy to use once set up
  • Impressively functional free version
Summary 12Pay is a powerful software tool designed to simplify every payroll function, within budget. The app is accessible by virtually any device and also has tons of features, including specialist payslip templates and a Simple Report Writer AI tool for monthly reporting. Test it out by downloading the free six-month trial for up to nine employees.
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  • Automatic month-end P32 summary updates - dramatically reducing time spent on admin
  • In-depth reporting functunality available to track employee data to help with key performance and evaluation decisions
  • Customers also reap the benefits of IRIS’s unlimited platinum phone and online support, which is incredibly helpful for first-time payroll software users
  • Because it's a more powerful software, IRIS can take longer to install and master than more usable rivals like QuickBooks
  • Employee portal and ePay window is only available as a paid-for add-on
  • IRIS doesn't provide an option for businesses to build their own payroll reports.

IRIS is one of the UK’s longest-running private software companies. It’s been supplying administration solutions to the country’s businesses, charities, and public sector for over 40 years – and has used that time wisely to implement lots of user-centric features that simplify the payroll process.

For example, the ability to print self-sealing payslips so you don’t have to waste time securing envelopes on a Friday afternoon.

What is 12Pay’s USP?

12Pay offers payroll business software that’s user-friendly, affordable, and in our expert opinion, a great all-in-one payroll solution for SMEs. It keeps all of your company payroll data securely in a centralised location for ease of access.

One particularly ingenious feature is the specialist payroll bureau – a digital resource containing key documents and guides to assist you in answering client queries. This is endlessly helpful for those firms with more complex payroll demands such as if you need to regularly enroll and manage new suppliers or subcontractors.

Used in conjunction with 12Pay’s specialist CIS (Construction Industry Scheme) Extensions for Subcontractors – which only QuickBooks also offers – 12Pay is the ultimate option for construction businesses that need to outsource large portions of work.

In terms of more practical considerations, the software integrates with HMRC, so online submissions are accurate all year round. RTI reporting and auto-enrolment are included in the service, so compliance is no issue either.


12Pay by IRIS is a great all-round payroll software that encompasses compliance, security, and accessibility. It’s ideal for small businesses wanting a professional, reliable service that offers flexible payroll options.

There is a free plan available with IRIS, but it is only suitable for up to three employees.

2. Sage: Best for small teams with fewer than 5 employees wanting a dedicated accounting resource

An elegant payroll solution that can act as entire accounting department for small firms.
  • Free trial 30-day
  • Price from £8/m for 1-5 employees
  • SImple, 4-step DIY payroll
  • Expert support 24/7
  • Good automations for saving time
Summary SMEs are often working with tight budgets when purchasing new technology, and Sage Payroll is an excellent low-cost solution for such employers. At just £7 a month for 5 employees, the platform is fully HMRC compliant and takes users through an easy four-step method for payroll processing, reporting and tracking. Plus, it’s cloud-based, so it can be accessed anywhere.
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  • Offers UK-based 24/7 customer support both via online live chat and over the phone to make onboarding easier (unlike Moorepay and IRIS)
  • The multi-user access feature gives each user a secure login. External guests like a qualified accountant can also be added for additional support.
  • Sage’s built-in corrections feature can amend data without rerunning pay runs. IRIS requires you to use a backup to undo any changes
  • You'll need to make use of the 24/7 access to a Sage expert - our research found customers report that Sage is incredibly time-consuming to set up
  • Our researchers do not recommend Sage for new payroll users. We gave it just 2 out of 5 for usability - best for those with software experience

Sage accounting

Sage has been specialising in payroll, HR, and integrated accounting software for more than 30 years. Today its 11,000 colleagues help millions of entrepreneurs manage their payroll and accounting processes.

Recent updates to the software have helped to bump up its score in our ratings – one being its pricing, which used to be based on team size and is now a more transparent flat rate.

What is Sage’s USP?

Sage’s monthly cost of £26 per month might seem expensive compared to other options on this list. However, you should remember that Sage is an accounting software, not just payroll, as our full Sage review highlights.

That means it can play the role of accountant for very small teams with fewer than five employees – great for budgeting during the current cost of living crisis.

The app also provides a very in-depth reporting function. You’ll be able to produce monthly, quarterly, and annual financial reports such as balance sheets, income statements, and cash flow statements (one of the reasons our expert researchers gave it 4.4 out of 5 in our most recent round of payroll testing).

Sage’s more sophisticated capabilities mean it can also generate comparative financial statements between two different time periods. Users have an exact understanding of where their cash flow has improved/worsened and can take decisive action based on up-to-date and accurate information.

We also recommend Sage for help and support over any other platform. Our researchers gave it a score of 4.5 out of 5 for this category, while Xero gets just 2.5 out of 5.


Sage’s Business Cloud software comes with 24/7, year-round expert support and is currently completely free for the first two months, making it an excellent choice for startups or micro-businesses that are just getting off the ground.

You can even trial the software free for 30 days before making any decisions, which is plenty of time to test out its wide range of features.

Want bespoke quotes from the best payroll software providers in the UK?

Our free 🔍comparison tool provides small businesses with provider quotes from the top brands on the market. All you have to do is fill out a few details, and we will instantly match you with quotes from the providers we think are most suitable.

3. Xero: Best for Xero accounting users with a large employee turnover, such as hospitality firms

Manage payroll in your sleep thanks to Xero's powerful automation tools.
  • Free trial? No
  • Price from £5 for 5 employees (+ a subscription to Xero Accounting software)
  • Mobile app gives employees more payroll transparency
  • Automations keep you HMRC compliant all year round
Summary Xero lets you manage your payroll and accounting seamlessly in one system, saving you time and resources. Its automation features are unrivalled, and the Xero Me mobile app is an excellent, easily accessible feature. The whole process of payroll is made easy with Xero software, and it really shows.
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  • Reduce payroll admin and save time by giving your employees limited access via the Xero Me mobile app or the web. They can even enter timesheets and request leave remotely
  • Employee self-service feature is also incredibly handy for viewing payslips and requesting leave online, reducing the need for add-ons
  • You must be using Xero accounting software to access the payroll service for a minimum cost of £6 per month
  • No telephone support in the event of a problem. We recommend you consider a trial before committing to Xero as the lack of customer support can create difficulties for new users

Xero payroll example

Xero made a name for itself with its industry-leading accounting software, and has since branched out to offer a number of products suited for small businesses and entrepreneurs, including its impressive payroll software.

What is Xero’s USP?

The best thing about Xero is the fact you can manage your payroll and accounting seamlessly in one system, saving you time and resources. The whole process of payroll is made easy with Xero software, and it really shows. Plus, the Xero Me mobile app is an excellent, easily accessible feature (only Moorepay has a similar application).

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

Firms with lots of employees coming and going (like hospitality) don’t need to worry about getting bogged down with pension re-enrollment – an area where we know small businesses can waste a lot of time on. Xero’s new pension re-enrolment workflow makes managing your cyclical pension duties fast and simple.


Automating your payroll duties is one of the easiest ways to ensure everything runs smoothly and up-to-date for that all important payroll year end deadline.

Xero’s automation capabilities are unrivalled. The app calculates tax, pension, and leave automatically, which is great for reducing management tasks if you have a large employee turnover. For example, if you’re a bar or restaurant.

You will need to purchase Xero’s Accounting starter plan for access. However, this weighs in at an incredibly affordable £5 per month, and includes three months of payroll software for free (for up to five employees).

4. Moorepay: Best for SMEs needing extra customer support, and a thorough onboarding process

Moorepay payroll

Medium-sized businesses will find Moorepay a great payroll software to use for going above and beyond in employee management.
  • Free trial? No
  • Price from Provides personalised quotes after assessing business needs
  • Switching from your old provider or in-house payroll is easy
  • Managers are instantly notified about payroll submissions so you can make speedy decisions
Summary Moorepay is a powerful payroll provider that has been designed with medium sized businesses in mind. Its feature list is impressive, as are its data storage capabilities. You can trawl through hundreds of employee records quickly to perform HR duties as well as just manage payslips. But that won't be necessary for businesses with fewer than 10 employees.
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  • Data is stored securely in UK IBM data centres with the latest Microsoft Azure cyber secure technology, removing any risk to business continuity
  • Employees, managers and admins can see and edit any information you want them to, meaning Moorepay also acts as a sole database for personnel records
  • Moorepay’s ISO 27001 certificate was reissued in 2021, achieving the international standard of security for protecting personal data
  • The software is not ideal for very large or very small businesses. Teams of more than 20, and fewer than 50, are in the sweet spot
  • This vendor doesn't provide live training to help businesses use their software.
  • Pricing isn’t transparent. That's not only difficult for getting started - but could cause issues with scaling

Moorepay is a goliath in the payroll services industry, used to pay one in six of the UK’s working population – but that doesn’t make it any less of a bespoke provider for SMEs.

What is Moorepay’s USP?

Moorepay’s payroll software is better-suited to medium-sized businesses as its costs simply outweighs the benefits for businesses with fewer than 20 employees.

Part of the reason for its higher price tag is that, alongside payroll features, Moorepay is a good example of a payroll-cum-employee management tool – it handles a wide range of HR duties like real-time, insightful dashboards and data-driven graphs.

These are undeniably handy, but won’t be necessary for a lot of SMEs. Still, important pull-factors that we know customers want from their payroll are all there with Moorepay and more. Security is dialled up to 10 with single sign-on, biometric login capability and privacy features.

As Moorepay is entirely cloud-based, anywhere access means greater flexibility for you and your employees. Plus, like with Xero, the Moorepay mobile app is gives employees will easily access their payslips, P60s, and book leave – so you’ll get less queries, and have more time.

Moorepay is HMRC compliant and BACS approved (permitted to send faster payment transactions on behalf of third party organisations). Plus, we like how easy it is for you to switch payroll providers as Moorepay’s customer support team makes this a painless process to complete.


We really like Moorepay as a secure payment option for teams that are working remotely or in a hybrid model. Its security features are second to none and, with plenty of employee management tools at your disposal, your workforce will be kept happy, updated, and importantly, paid on time.

Still, we’re not impressed by the app’s opaque pricing plans. Lack of transparency is unfortunately an issue with a lot of business software tools. That’s why we designed our 🔍online comparison tool. It’s 100% free to use and gives you direct quotes from the top providers on the market – a much quicker way to compare costs.

We get it, there are plenty of providers offering similar products, and it can be a pain reading through reviews and analysing comparison tables...

So why not answer a few simple questions about your business using our easy-to-use comparison tool, which will tailor your specific needs to the best payroll software available.

You’ll receive bespoke quotes and additional product information to make it easier to select your best-fit provider. Plus, it only takes a minute.

5. QuickBooks: Best for micro businesses with just one employee

Simple to use, high-performing accounting software.
  • Free trial 30-day
  • Price from £1-7/mo plans + 0.40/mo for payroll features
  • All-in-one accounting solution
  • Gentle learning curve for new users
Summary QuickBooks is an HMRC-recognised software that helps you manage your taxes, cash flow, invoicing and payroll, all in one place. There’s no contract, and its award-winning UK-based phone support is free for users. Prices start at only £5 per month for the first four months, with a maximum of three users.
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QuickBooks is a big player in the world of small business payroll software, with some great features that are relied upon by small firms across the UK. Its self-employed accounting software is highly regarded as the best out there, and its payroll software isn’t too shabby either…

What is QuickBooks’ USP?

If you’re looking for easy-to-use, functional, and aesthetically pleasing payroll software, look no further than QuickBooks. Its HMRC-compliant software does all your calculations for you and updates tax codes automatically, so you can simply submit your figures in a couple of clicks.

Unlike IRIS, Moorepay, Xero, or Sage, Quickbooks pays dues to sole traders with a set of specialist self-employed features. Feel assured you’re paying yourself correctly with Directors National Insurance contributions (NICs) calculations and Automatic Real Time Information (RTI) submissions to HMRC.

That doesn’t mean you can’t hire any other staff. The self-service employee portal has similar functionality to other software providers like 12Pay and Xero, enabling your employee to enter their address, access payslips, enter timesheets, request leave and even submit expenses.

Still, we’d recommend this basic, stripped back system for teams with no more than one employee. It’s low maintenance – but that does sacrifice some key payroll elements like slimmer employee portals and less features on its mobile version than desktop.


The fact we could have listed off another paragraph or two worth of features is evidence that QuickBooks is a great payroll software choice for micro businesses or side hustles that want a cheap option they can use to manage both their payroll duties and their cash flow.

As with Xero, integration with QuickBooks’ accounting software is required in order to access the payroll offering.

  • Data is stored securely in UK IBM data centres with the latest Microsoft Azure cyber secure technology, removing any risk to business continuity
  • Employees, managers and admins can see and edit any information you want them to, meaning Moorepay also acts as a sole database for personnel records
  • Moorepay’s ISO 27001 certificate was reissued in 2021, achieving the international standard of security for protecting personal data
  • You'll need to fork out for QuickBooks' premium plan for more advanced capabilities like tracking employee time and billable hours.
  • Employees can only be paid by direct deposit on Quickbook's lowest-tiered plan. You'll need to pay more for printable options

Payroll software: key features comparison table

HMRC and RTI compliant
24/7 supportXXX
BACS payments
Standalone softwareXX
Transparent pricingXX
Free trialXXX

Next steps: roundup and comparison of the best payroll software in the UK

  • Our top-rated provider, 12Pay by IRIS is a superb, all-round payroll product that comes with a lot of extra support and specialist industry products that are particularly beneficial for contractors.
  • Sage’s payroll software can play the role of an accountant for your business, helping you to keep an eye on your overall financial performance as well as payslips.
  • Xero’s automation will streamline your admin duties, particularly if your business deals with a lot of employee turnover.
  • Moorepay is an excellent choice for larger businesses with employees based in more than one office.
  • Quickbooks is a great option for basic payroll and accounting management if you’re a sole trader.

Regardless of our opinion, you should always compare the best payroll software available before signing on the dotted line. The last thing you want is to be stuck in a contract with a service that doesn’t fulfil the needs of your business, even if it is, generally speaking, a great product.

This is where our custom-built comparison tool comes in. We’ve partnered with some of the best payroll software providers to help you get the best service for your business, including the likes of IRIS and Moorepay.

Simply fill in a few basic details, and providers will be in touch with bespoke 🔍personalised quotes for you to compare, along with further details about why the service they offer would best suit the needs of your business.

Payroll FAQs
  • Do I have to use payroll software?
    As a business owner, you have a responsibility to report your incomings and outgoings to HMRC for tax purposes, and this includes paying yourself and your employees. You don’t have to use payroll software, however. Instead, outsource your payroll to a managed provider.
  • What should I look for in a payroll provider?
    Important features and capabilities you want from payroll software include HMRC and RTI compliance (so you're not breaking the law) customer support (in case you need help using the software) employee self-service (to ensure your employees can access all their payslip information) and general security (to protect sensitive data such as bank accounts).
  • What does payroll software do?
    Payroll software is an application that assists you in organising, managing and automating employee payments. It ensures you remain compliant with tax regulations and the requirements set out by HMRC. It also streamlines and automates payroll processes, so you can save time and reduce the cost of employing a large team of payroll professionals and administrators.
Written by:
Ross has been writing for Startups since 2021, specialising in telephone systems, digital marketing, payroll, and sustainable business. He also runs the successful entrepreneur section of the website. Having graduated with a Masters in Journalism, Ross went on to write for Condé Nast Traveller and the NME, before moving in to the world of business journalism. Ross has been involved in startups from a young age, and has a keen eye for exciting, innovative new businesses. Follow him on his Twitter - @startupsross for helpful business tips.
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