7 best payroll service providers for 2023

In today's inflationary environment, average UK salaries are increasing across the board. For companies, it's now vital to find an advanced, transparent payroll provider which will keep you in control even as record pay rises continue to hit the headlines.

Our expert researchers identified IRIS as the best payroll provider for SMEs as a full-featured service that's fully HMRC-compliant, and offers affordable payroll pricing. They examined 12 categories that our readers have told us are important for payroll like help and support tools, time tracking, HR, and benefits management.

But regardless of IRIS’s title as our best payroll service provider, is it the right choice for your business? In an uncertain economy, you want to know your software offers the best value for money for running cost-efficient business processes. We've gathered our top picks below:

For a handy price comparison, we recommend taking a moment to get 🔍personalised payroll service pricing quotes for your business. This service is free, takes just minutes, and involves zero obligations on your part.

This article reviews the best payroll service providers, but it's worth being aware that payroll software is also a solid option for small businesses. It enables you to manage your payroll in-house using a simple software interface, and can automate processes including payroll runs, tax deductions, and HMRC reporting. Payroll software is also usually cheaper than outsourcing your payroll to a service provider.

If you're interested in payroll software, we recommend checking out Rippling. Starting at £7 per user, per month, it's affordable, and during our latest round of software testing, we were impressed by its customisable features and reports, and its compliance assistance.

What is a payroll service provider?

Payroll service providers are third-party entities that are hired by businesses to oversee complex payroll processes. Outsourcing these responsibilities, small businesses avoid many time-consuming payroll tasks, and can ensure they are being fully HMRC-compliant when paying staff.

Companies hand over their employee data and the payroll service will take care of your organisation's payroll duties. As well as the basics of processing payslips, these responsibilities can include collecting and collating timesheets, calculating bonuses and allowances, and scheduling bank payments.

Payroll providers are often able to complete payroll tasks for a low cost, as they use software to set up and then automate many of the tasks involved. This, combined with the surge in hiring non-employees like freelancers, means payroll providers have become more popular amongst SMEs in recent years.

1. IRIS

IRIS is one of the UK’s longest-running private software companies. The company has been supplying administration solutions to the country's businesses, charities and public sector for over 40 years, and is best for small businesses with complex payroll structures, such as those employing sub-contractors.

The IRIS Payroll user dashboard tells you all the information you need about annual, monthly, or weekly employee pay

IRIS Payroll features

IRIS dishes out regular training on the latest payroll legislation to help your employees develop a clearer understanding of payroll – giving you the flexibility to move in-house in the future or transition to a partially managed service.

This is a good solution for long-term payroll planning. SMEs who want to outsource payroll but are nervous about the impact that a new contract might have on cash flow will find it helpful to know they can adjust their payment terms easily if needed.

We particularly like that IRIS provides industry-specific programmes for multiple sectors, such as local government or teacher pension schemes, the Construction Industry Scheme (CIS) and expatriate pension management. These different specialities are designed to take care of user specific problems. For example if you're a contractor that employs lots of sub-contractors, IRIS can easily input CIS deductions in employee tabs.

One thing that IRIS is lacking in is year end features. It doesn't fully take care of all the steps required for your final payment submissions (FPSs), whereas a more expensive option like Moorepay does.

Notably, IRIS will also dish out regular training on the latest payroll legislation to help your employees develop a clearer understanding of payroll – giving you the flexibility to move in-house in the future or transition to a partially managed service.

Verdict

IRIS offers the best managed payroll services, and it’s clear to see why. Not only does IRIS take full ownership of your whole payroll department, but it does so with guaranteed compliance, minimised costs, and simplified processes.

There are no set up fees, and the specialist payroll team can handle a wide variety of payment schemes and monthly pay run deductions using its own in-house software.

2. PayEscape

PayEscape might not be as established as the likes of Moorepay, but the company is one of the fastest growing payroll providers in the UK. In large part, that's down to costs. In a world of opaque pricing plans, PayEscape has set, flat-rate costs that make it much easier for SMEs to plan their budget around.

Unlike IRIS, Moorepay, and any other provider on this list, you'll know what you're getting with PayEscape. We think it is best for small businesses with a volatile cash flow and wanting to pay no more than £60 per month.

PayEscape users can use the brand's cloud-based software, Webscape, to review their employee payments at any time

PayEscape pricing

PayEscape features

PayEscape has a shared focus of HR and payroll management. Its attention is somewhat divided, and there are some fundamentals missing from the PayEscape platform such as a designated account manager (often one of the key motivators behind outsourcing payroll).

Other than that, there's really not much to dislike about the platform if you're just looking for a basic system that gives an oversight of your employee payslips. You'll also be on a monthly rolling contract, which is a big comfort to firms that may be worried about recession-proofing their business this year.

Unlike competitors IRIS and MHR, Payescape’s managed payroll can also integrate with industry-leading software, including Xero accounting, Sage, Kashflow and Microsoft Navision. This makes outsourcing your payroll a pain-free, easy process without having to manually input data into new or existing software.

Verdict

PayEscape's set monthly cost of £53 per month does not mean it is the cheapest option available (although it is low on the cost spectrum for payroll). What it does mean is that you'll know exactly how much you're going to pay upfront which saves a lot of hassle when it comes to setting up.

Indeed, startups or side hustle firms that don't have a consistent cash flow will like knowing exactly how much they need to spend on the platform each month. We recommend it for those wanting a contract they can get out of easily should they run into financial trouble.

3. Moorepay

Moorepay is a goliath in the payroll services industry that's used to pay one in six of the UK’s working population. Because of its simplified onboarding process, we think it is best for SMEs with fewer than 10 employees that are switching from another provider.

Moorepay customers can easily add new employees into its HMRC-compliant software for Moorepay to take care of their payslips

Moorepay features

Moorepay’s payroll service covers every industry except accounting, making it an extremely versatile provider that supports the most niche of industries – although we were a bit disappointed by the smaller range of industry specific plans as offered by IRIS.

However, according to our analysis, Moorepay stands out against competitors as an excellent and bespoke provider for switching payroll providers.

New signees are given access to Moorepay's implementation team who give training and support every step of the way – and an account manager who will stay with you after the process is complete. During your switch, Moorepay also handles any legislative or policy changes on your behalf.

Still, we don't recommend Moorepay for teams of fewer than 10 employees. Its ‘extra-mile' features like real-time, insightful dashboards and data-driven graphs are handy, but won't be worth the larger price tag for smaller SMEs – particularly not when you're trying to keep costs down in today's poor economy.

Verdict

Moorepay is best suited to small businesses that are wanting to switch payroll providers thanks to its focus on a swift and painless transition period.

Not only do customers receive a tailored package suited specifically to their business needs, but we also like that Moorepay provides a dedicated payroll specialist for added support. All of these added extras do impact Moorepay's affordability, however.

4. Advanced Business Payroll

Advanced Business Payroll provides a range of payroll services, including managed and in-house options, to comprehensively cater to your business needs. We think it is the best option for beginner payroll users who need a lot of help and support getting started.

The Advanced Business Payroll back-end is simply laid out so users can easily onboard new employees

Advanced Business Payroll features

One of the main benefits of using Advanced Business Payroll is access to CIPP-accredited expert advice. This can be particularly useful for businesses that are new to payroll management or for those who want to ensure that they are complying with the latest regulations.

This is particularly handy when you think of the swathe of employment law changes that have been introduced just this year, such as a new national minimum wage and an increase in statutory sick pay.

The platform offers a suite of other HR and recruitment services that can make it a one-stop shop for many businesses. These services include time and attendance tracking, HR management tools, and compliance with all UK payroll rules and regulations.

Advanced Business Payroll does have some limitations, however. The platform doesn't have an open API, which may make it challenging to integrate with certain third-party tools. It also lacks ready-made integrations with accounting software, which may require extra work for users who want to use the platform in conjunction with other financial tools.

One further limitation of Advanced Business Payroll is that it doesn't provide employees with a mobile app. While the platform is a great example of online payroll that is accessible from any device with an internet connection, some users may find it less convenient than a dedicated mobile app.

Verdict

Overall, while Advanced Business Payroll offers a comprehensive range of payroll and HR services, businesses should carefully consider its limitations before committing to the platform.

Businesses that require seamless integration with other software tools or those with a highly mobile workforce, however, may need to look for alternative solutions that better suit their needs.

5. MHR

MHR has been operating for over 35 years in the HR and payroll industry, and is a specialist in the field of talent management, with 1,000+ companies relying on its services. Its impressive business disruption features mean we think it is best for SMEs in less predictable industries, like hospitality.

MHR iTrent offers a comprehensive dashboard to measure data and analytics, giving you complete oversight of all employee pay information so you can stay fully in the payroll loop

MHR features

MHR’s claims to be an agile managed payroll admin service that can easily integrate with a number of industry leading systems for accounting and HR – although it doesn’t specify which systems, and our testing found the range of add-ons disappointing.

Still, MHR's unique emergency payroll support feature will outweigh this flaw. If your staff are overwhelmed, MHR steps in to provide an expert consultant to manage every aspect of your payroll, rather than just the admin side of things.

Given the many plates that business owners are currently spinning, SMEs in hard-hit industries like hospitality will appreciate having this option. HMRC-compliant submissions, payroll reports, absence reports and BACS processing are just a few of the other core features included in the service.

Verdict

MHR is a viable choice for small businesses in turbulent, unpredictable industries like hospitality. Should you encounter difficulties with payroll management, MHR's flexible emergency option can be activated to give you more help.

6. ADP UK

ADP is one of the UK’s largest payroll specialists, and has over 920,000 customers according to its website – but it is only available for a minimum of 25 employees. As a result, we think it is best for larger teams needing a tailored payroll plan to match their growth ambitions.

The ADP dashboard displays weekly payroll information, including a manager to-do list, so you'll have complete oversight of all completed and upcoming payroll tasks

ADP UK features

ADP is a solid choice for established firms looking to become the ‘M' in SME. It offers various other services outside of payroll including HR, recruitment, and time and attendance tracking – which makes it a very cost-efficient option for companies trying to minimise software spend and keep overheads down.

MHR and TopSource Worldwide have similar capabilities. However, while these apps automatically add extra functions to your subscription, ADP advertises them all as add-ons to be built into your plan as you go.

Indeed, ADP's offering is incredibly flexible and can be tailored exactly to your requirements, with their experts even on hand to answer any pay-related questions from your own employees.

Plus, a customisable and scalable pricing model charges you per employee, per month, giving you peace of mind that any changes in your business will be reflected in the cost of your payroll service.

Verdict

ADP is up there with the best in terms of its flexibility and cost-effectiveness for micro-businesses, as a multi-functional platform that can fulfill many management roles. The provider's payroll experts work alongside you all the way to create a structure that fits your pay cycle, so it feels collaborative rather than disjointed.

That being said, ADP is very limiting with its minimum number of users. If you're a small employer such as an independent shop owner, this option is not for you.

7. TopSource Worldwide

TopSource Worldwide is a London-based payroll and HR service provider that specialises in supporting businesses that operate internationally. Naturally, we think it is best suited to firms with a global recruitment plan, or those with offices / customers based abroad.

The TopSource website makes clear its USP of servicing companies with an international employee base

TopSource Worldwide features

Inarguably, the standout features of TopSource Worldwide is its international payroll capabilities. As more businesses hire from abroad to combat skills shortages, TopSource is the ideal provider for SMEs operating or expanding globally. Its team of experts will ensure you remain confident and compliant in over 150 countries.

Other providers, including IRIS, do have internationally-compliant management plans. However, you'll need to fork out a lot for these more premium options as an add-on to your existing plan.

Switching your managed payroll provider to TopSource is also simple and super quick, with turnaround times of as little as four weeks due to TopSource’s streamlined onboarding methods.

All of the essentials are covered, including HMRC registration, pension calculations, and end-of-year processing. And a range of reporting systems come as standard that can be expanded into timesheet processing, management of holiday and auto-enrolment.

Verdict

TopSource Worldwide is the best option for small businesses that need international payroll management. Its team of experts are specialised in global payroll compliance – a level of customer support and service is a definite selling point for global firms, which often require a more bespoke solution.

How does a payroll service work?

Theoretically, a payroll service could take care of 100% of the process of paying your employees. Users can simply hand over their admin responsibilites to the provider, and the platform will automatically track employee hours, calculate their pay, subtract the necessary taxes, and pay the employee.

How involved your payroll provider is does depend on the type of service you choose. Some companies take care of everything, otherwise known as a ‘full-service' payroll provision.

Others are known as ‘DIY payroll', because they do the toughest parts of payroll, while leaving basic administrative tasks to your HR manager or accountant. We explain how these differ below:

1. Full-service payroll

This option is generally simpler for the business but, naturally, it costs more. It must also be used in conjunction with employee management software as the provider needs to be able to access workers' timesheets, as well as their employment terms or tax status.

2. DIY payroll

This option is cheaper for the business, but you'll split the tasks involved with the provider. For example, you might keep employee records, but your partner may take care of sending payments, calculating taxes and other deductions. Our guide to the best payroll software for SMEs has more details on the options available.

What types of businesses are payroll services suitable for?

Payroll outsourcing is best for small companies with fewer than 25 employees. That's because it's essentially like hiring another department for your company if you haven't got the resource to employ an in-house accounting and HR team yet.

It is also suitable for companies that are growing their team. Large teams face a bigger risk that they will make mistakes during payroll. Or, they might fail to deliver timely payslips, which can be a huge red flag to employees.

There are some risks involved with swappng to a new payroll provider. We recommend that companies properly vet and demo their chosen company before pressing ahead. Onboarding can present obstacles, so it's a good idea to plan your switch months in advance to prepare for any issues.

Time of year is another factor to consider if you're thinking of switching to a payroll provider. Most managers will look to outsource their payroll about three months before the financial year starts. So if your financial year ends on 31st March, you should start the process of changing your payroll no later than December.

How much does it cost to outsource payroll in the UK?

It depends on the provider, as most payroll services only offer bespoke quotes rather than set pricing plans. This is because the demands of your employee pay can vary massively depending on industry, team size, and benefit structure. SMEs should expect to pay around £6 per employee, per month as a payroll fee. So, if you have 15 employees, it will cost you £90 per month.

Buying guide: how to choose a payroll service provider

1. Expertise

Expertise matters; it's the linchpin of a reliable payroll service. Look for providers with a proven track record in handling diverse payroll needs. Assess their experience in your industry to ensure they understand the nuances unique to your business.

2. Tax administration

A proficient payroll service provider should navigate tax regulations effortlessly. Ensure the provider stays abreast of tax law changes, minimising compliance risks.

3. Data security

Security breaches can be catastrophic. Prioritise providers with robust data security measures. Encryption, secure servers, and stringent access controls are non-negotiables. A trustworthy provider will reassure you with their commitment to safeguarding your sensitive information.

4. Payroll reporting capabilities

Detailed and accurate reporting is the bedrock of effective payroll. Assess the reporting capabilities of the provider – customisable reports, real-time insights, and compliance reports should be part of their arsenal. This ensures you're not just processing payroll but leveraging valuable data.

5. Employee experience

A payroll system isn't just for administrators; it directly impacts your employees. Choose a provider that offers user-friendly interfaces and accessible employee portals. This not only enhances employee satisfaction but also reduces the administrative burden on your HR department.

6. Setup and training processes

Smooth onboarding and training processes are super important. A provider should offer comprehensive training to your team, ensuring everyone is adept at using the system. Evaluate their setup processes – the quicker, the better, without compromising accuracy.

7. Customer support options

The world of payroll is dynamic, and issues may arise. Responsive customer support is invaluable. Opt for providers with multiple support channels – email, phone, and live chat. Timely and effective support can be a lifesaver in critical situations.

8. Software integrations

Your payroll system shouldn't operate in isolation. Assess the provider's compatibility with other software your business uses. Seamless integrations with accounting software, time-tracking tools, and HR systems enhance overall operational efficiency.

9. Other HR services available

Consider your future needs. A provider offering a broader spectrum of HR services can be a strategic choice. From benefits administration to employee onboarding, having a one-stop solution can streamline your HR processes.

Remember, HMRC compliance is not negotiable when selecting a provider. Ensure your chosen service ticks this crucial box, reassuring you of their commitment to regulatory standards and your business's compliance. Fortunately, all the ones we feature in this list are.

Why should I invest in a payroll provider?

Outsourcing your payroll is an easy way to save time and avoid stress during one of the most complicated aspects of managing a business: making employee pay submissions. During payroll, many business owners struggle to find the time to remain on top of:

• Administrative processes
• The regular changes in tax law and regulations overseen by HMRC
• The many and varied deductions and calculations related to an employee’s gross salary each week or month
• The data input associated with payslips and other documentation such as annual P60s

Payroll service providers can do all of the above much more efficiently and accurately than an in-house excel spreadsheet could ever hope to. Get started with our 🔍free cost comparison tool, which matches you with the best managed payroll providers in the UK, including the likes of IRIS and Moorepay.

Payroll services: our research methodology

With over two decades of dedicated service to small businesses, our research team stands as seasoned experts in the realm of payroll. In our latest research cycle, geared towards startup users, we identified the key considerations that are crucial for payroll outsourcing.

When delving into the realm of payroll service providers, our research team honed in on the following categories, recognized as pivotal factors for UK businesses:

1. Accuracy

Accurate payroll processing is non-negotiable. Our assessment delves deep into the precision of each provider, ensuring that your payroll transactions are error-free and compliant with regulatory standards.

2. Expertise

Expertise forms the cornerstone of reliable payroll management. We evaluated the depth of understanding and proficiency each service provider possesses, especially concerning industry-specific nuances.

3. Data security

Security is paramount, especially when handling sensitive payroll information. We thoroughly examine the data security measures implemented by each provider to guarantee the utmost protection of your confidential data.

4. Control

The ability to maintain control over your payroll processes is a significant consideration. Our evaluation assesses the level of control offered by each provider, ensuring that you have the flexibility to manage your payroll in alignment with your business needs.

5. Scalability

As your business grows, your payroll demands evolve. Our research scrutinises the scalability of each provider's services, ensuring they can seamlessly adapt to the changing needs of your expanding business without compromising efficiency.

Our commitment to providing comprehensive insights stems from a deep understanding of the unique challenges faced by startups. By focusing on these fundamental categories, our research methodology aims to empower you with the knowledge needed to make informed decisions when selecting a payroll service provider.

Next steps: get started with the best payroll service provider in the UK

Our experts have found that the best managed payroll service provider is IRIS. This reputable, established provider flaunts its vast experience with an exceptional payroll expertise that covers the majority of UK payment schemes.

As you'll have noticed, all but one of the above providers have no clearly-defined pricing plans. Given that most SMEs will have a specific budget in mind for managed payroll, we think this is a significant drawback for research.

We decided to make things easier by building a simple 🔍online cost comparison tool. By partnering with some of the best payroll service providers including IRIS and Moorepay, we can give you exact quotes from multiple providers to compare at the same time so you'll be able to see how they all compare in one handy place.

Simply provide us with a few basic details about your business needs to get started, and providers will be in touch with personalised quotes.