Payroll services

GOV.UK sets out the same steps for every payday. Using payroll software, the employer records each employee's pay, works out the tax and National Insurance to deduct, works out employer National Insurance, produces payslips and sends a Full Payment Submission to HMRC.

Alongside that, a payroll service usually handles new starters and leavers, statutory sick, maternity and paternity pay, student loan deductions, workplace pension contributions and the year-end paperwork. A provider can be an accountant, a bookkeeper or a specialist payroll bureau; payroll agents that provide accountancy services or tax advice are among the businesses covered by the anti-money laundering rules.

Payroll is not just for firms with large workforces. Typical examples include:

• a limited company that pays its director a salary each month
• a restaurant with weekly-paid staff and changing hours
• a care business with shift workers, sick pay and holiday pay to track
• a seasonal business that takes on extra people for a few months each year
• a small charity or club paying a part-time administrator

If you are setting up a company and wondering how directors are paid, our page on accountants for limited companies explains the basics.

Tax months run from the 6th of one month to the 5th of the next. The table shows the regular deadlines employers work to, plus the main year-end dates.

Employee National Insurance is 8% between the primary threshold and the upper earnings limit, and 2% above it. Employers pay 15% above the secondary threshold. The Employment Allowance for 2026 to 2027 is £10,500, which can reduce an eligible employer's National Insurance bill. GOV.UK says that if a company has only one director, they must not be the only employee liable for secondary Class 1 National Insurance, so check the eligibility rules before you claim.

Automatic enrolment into a workplace pension uses an earnings trigger, which is £10,000 for 2026/27, and a band of qualifying earnings from £6,240 to £50,270. The full duties, including contribution levels, are set out on GOV.UK, so check them there or with an accountant.

Several changes for April 2027 have been announced but are not yet in force. The Government has accepted in full a National Living Wage of £13.21 for workers aged 21 and over, £11.27 for 18 to 20 year olds and £8.31 for 16 to 17 year olds and apprentices. HMRC has also said that mandatory payrolling of benefits in kind will be phased in, with the first phase from 6 April 2027; its guidance on this is still interim.

A business with one or two people on a fixed salary can often run payroll itself using payroll software. People tend to outsource it when there are variable hours, overtime or tips, when staff go on sick leave or parental leave, or when the owner simply does not want a fixed task every payday. Whichever route you choose, it is worth agreeing who checks each pay run before it goes to HMRC.

• Is the price per employee, per payslip or a flat monthly fee, and is it confirmed in writing with the scope of work?
• Does it include pension submissions, starters and leavers, P60s and the benefits return?
• What do they need from you each pay period, and by when?
• Who is responsible if an FPS goes in late because information arrived late?
• Are they supervised for anti-money laundering by HMRC or a professional body?
• Will the same person run your payroll each month?

Payroll is usually priced per employee or per payslip. Crunch, an online accountant, lists employee payroll at £20+VAT a month for up to 5 employees. Local providers set their own fees, and our guide on how much an accountant costs has more on what affects the price.